TMI Blog2000 (8) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... name and style of Mahavir Rolling Mill. During the accounting year relevant for assessment year 1993-94 under appeal, the assessee transferred the assets and liabilities of the business to the Company, Mahavir Rolling Mill (P.) Ltd. for the total consideration of Rs.86,21,000 vide agreement dated 1-9-1992. The assessee worked out the capital account as well as P L a/c and balance-sheet of the proprietary concern as on 31-8-1992 and worked out the surplus realised on the fixed assets at Rs.48,35,773 and disclosed the same as long-term capital gains in the return filed on 31-10-1993. The amount of capital gains in the computation sheet has been worked out by the assessee as under:- ------------------------------------------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, did not file any revised return. The Assessing Officer observed that the computation of surplus by the assessee in the computation sheet enclosed with the return clearly reveals that the surplus has arisen on account of fixed assets i.e. block of assets of the proprietary concern and the excess over the written down value of the block of assets worked by the assessee himself at Rs.48,35,773 is liable to be assessed as short-term capital gains under section 50(2) of the Income-tax Act. 3. In appeal, the ld. CIT(A) upheld the action of the Assessing Officer and held that surplus realised on the sale of block of assets is liable to be treated as short-term capital gains under section 50(2) of the Act. However, the Id. CIT(A) directed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich becomes evident from the provisions of section 55(2)(a) of the Act. 2. In the present case the Judgment of the Supreme Court in the case of Electric Control Gear (P.) Ltd. [1997] 227 ITR 278 shall apply and not the case of Artex Mfg. Co. [1997] 227 ITR 260 because there is no allocation of sale price into different components. 3. In any case the capital gains must be taxed as long-term. See section 50B." 5. Shri A.D. Makwana, the Ld. DR also made written submissions and argued that the provisions of section 50(2) are clearly applicable to the instant case since the surplus realised on the block of assets worked by the assessee himself in the return refute the contention of the Id. counsel that there is no itemised valuation of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sation of the block of assets held by the assessee. Total W.D.V. of the block of assets aggregates to Rs.28,67,418. The assessee has deducted the sale consideration of Maruti car separately for an amount of Rs.50,000. Thus total W.D.V. of the block of asset (after excluding sale consideration of Maruti car) has been worked out at Rs.28,17,419. On the basis of this computation, the assessee has worked out the surplus realisation on sale of fixed assets like building, plant and machinery, furniture and fixtures etc. at Rs.48,35,773. In the return of income this amount has been shown as long-term capital gains. In the light of these facts, we see ample marits in the contention of the Revenue that the excess realised on the sale of fixed assets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of the information that was furnished by the assessee before the Assessing Officer it became evident that the amount of Rs.11,50,400 had been arrived at by taking into consideration the value of the plant and machinery and dead stock as asset by the valuer at Rs.15,87,296. On these facts, the Hon'ble Supreme Court observed at p. 276-- "This is not a case in which it cannot be said that the price attributed to the items transferred is not indicated and, hence section 41(2) of the 1961 Act cannot be applied. We are, therefore, unable to agree with the view of the High Court that section 41(2) of the 1961 Act is not applicable." We feel that the facts of the instant case before us stand on a much stronger footing inasmuch as i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts have been treated as non-genuine under section 68 for the immediately preceding assessment year 1992-93. Vide our order in ITA Nos. 701 and 558/96 for the immediately preceding assessment year, we have restored the issue of genuineness of cash credits to the file of the Assessing Officer. Consequently the issue of interest payment on such credits is also set aside and restored to the file of the Assessing Officer. 12. Ground No. 5 is against levy of interests under section 234B and under section 234C of the Act. The ld. DR argued that interest charged under sections 234B and 234C is compensatory in nature and no interference is called for in view of the following decisions:-- Dr. S. Reddappa v. Union of India [1998] 232 ITR 62 (Kar. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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