The Commissioner Of Income Tax vs M/S Brindavan Beverages Ltd on 30 September, 2009

[Cites 19, Cited by 9]

Karnataka High Court

The Commissioner Of Income Tax vs M/S Brindavan Beverages Ltd on 30 September, 2009

Equivalent citations: 2010 (2) AIR KAR R 314

Bench: D.V.Shylendra Kumar, Aravind Kumar

 

I'

IN THE HIGH COURT OF KARNATAKA
AT BANGALORE

Dated this the 30"' day of September, 2009 __  ' ' ' V
PRESENT A'

THE I-ION'BLE MR JUSTICE Dav   .v T 1:'
THE HON'BLE MR JUSTICE.  

Income Tax Appeai No..;320 'of 2-004,

Income '1'axApp.eﬁ~! Nc-i. 5.9.7 "of. 2004

Income TaxAppeg_1 N0. 32:'; of"'200=4[ ._ 
._ iAnd_ : _  W .

Inconze" T'&g:,V}1ppV:.al   

In rm No. 320 of 21:03? 

Between:

1. THE COVE',/1MI.SSIONERj<OF'v«INCOME TAX
C.R. BUILDING,   ,  '
QUEENS ROAD,-

BANGA.I.,ORE. ..

2Q '  DE;PU'I'Y..COMi\/IISSIONER
 ,OF.INCOM;€--T1&X.

 L cIRCL.E:--z,_1{;.);"  
"C.RL__BUILI3I.NG,_*"
QUEENS ROAD,"
BANGAL_ORE.«--"  APPELLANTS

"  my Sri M.V. Seshachaia, Adv]

 -

' «M-,r_SL"BR:NDAvAN BEVERAGES LTD., . _ NO, 2-14'/33. 7""--é CROSS, CUNNINGHAM ROAD, VASANTHNAGAR, BANGALORE -- S2. RESPONI).E3:1'Jf»I_V.vV {By Sri. A. Shankar, AdV.] THIS APPEAL IS FILED UNDER SECTION 1'260A"*OjP THE INCOME TAX ACT, 1961. PRAYING TO SET ASIDE,TIIE'«._OI2.DER..,.I. DATED 08.01.2004 PASSED IN ITA NO. "1157':7/BANG/V2002: FOR THE ASSESSMENT YEAR 19992000 AND I5:I*C,, In ITA No. 597 of 2004 ' Between:

BRINDAVAN BEVERAGES LIMITED,' REP. BY ITS MANAGING' DIRECfITO.R». ' 214/33,791 CROSS." =i 'g CUNNINGHAM ROAD,' 'V ' .. .

VASANTANAGARJ BANGALORE--52.--._=-- :i;__ H .. APPELLANT SP1' ' 'SﬁaI}EEaf, Adm] And: A 1 W H :

THE DEPUTY COMMISSIONER-

OF INCOME TAX, '' CIRCLE-I.E1m;_---9.. A N'RUPAT.L_IN GA BA1\1GALORE.' _ 'I .0 * A RESPONDENT ' M.V. Seshachala, Adv.] THIS APPEAL TS FILED UNDER SECTION 260A OF THE

4. ._INC'OMETAx ACT, 1961, PRAYING TO SET ASIDE ORDER DATED '~._28..0S._200»<Ij; PASSED IN ITA NO. 1577/BANG/2002 FOR THE ASSESSMENT YEAR 1999-2000 AND ETC, In ITA No. 325 of 2004 Between:

BRINDAVAN BEVERAGES LIMITED, 214/ 33, 75"" CROSS, CUNNINGHAM ROAD.

VASANTANAGAR, BANGALORE -- 52. AppE;,L._AA1*r' V' W V. [By Sri A. Shankar, Adv] And:

THE DEPUTY COMMESSIONER OF INCOME TAX, _ CIRCLE--11(1},NRUPATUNGAROAIZI ._ " ~ V ._ BANGALORE. = .__RESPOIk§[)ENT ]By Sri. M.V.:"s¢shae'i:a1é.;j .Aév:] V THIS APPEAL IS FILED' 'UNDER? "'f?:¢6OA OF THE INCOME TAXACAE. i;:961",::fiA;3':?A"Yu§I'G 1'O"sE:1* ASIDE ORDER DATED 08.01.2004 IPASSED "1f3fA'4..ONO,_ .1577/BANG/2002 FOR THE ASSESSMENT YEAR 1_999j'--~2.OOO In ITA No. 2921 of 2005' . ' Between; ' "

L " CEHVEIQIISSIONER OF INCOME TAX ' V.OC:E.,1;ng11.'D1NG§._ .

gUEE.Ns.GROAOV,_..~ '-BAN'GALO'RE.A';:

2,. JOiN*;"'«GOMM1ss:ONER OF INCOME TAX, .. SPECEAL RANGE 1, GR. BUILDING, A _gUEENs ROAD, BANGALORE APPELLANTS [By Sri M.V. Se-shachala, Adv.) Ané:

HAWLETT PACKARD INDIA SOP IWARE OPERATION LTD..

N029, CUNNINGHAM ROAD.

BANGALORE-- 52. RESI%'oND.ENT '' [By Sri. G. Sarangan, Sr. C_0urIS:e1 ' 4' Miss Vani. I-1., Adv} I I I A' THIS APPEAL IS FILED UNDER SE(i'If1_01\1 260A " INCOME TAX ACT, 1961, PRAYING 'I*0._SE':* ASIDE ORDER~;DA"I'ED 31.03.2005 PASSED IN ITA NO. 863 /EARS/2002 AN--D_ E'{'C., THESE APPEALS. HAVI_NG_ BEVEN_H'E1ARD~,AND RESERVED FOR JUDGMENT ON 23s/~2009;VS.,' ; C'QMING ON FOR PRONOUNCEMENT OF JUDGMENT 'IT~EIS~.._ DIVE, SHYLENDRA KUMAR J., DELIVERED THE EeLI.o\An2sI0V.:' ' ~ "

aunAAEwr RE: ITA 2071 10F'20Q§_ I This appe.eIl":0f ;t4I*1«e:LVI'revenue under Section 260- A of the }fI1t:oIne I961 [for short 'the Act'] directed :.ag0.iI1St:IIi1eIeifdehdated 31.03.2005 passed by the Income Tax" ._ ' ' Tribunal, Bangalore in ITA N0.863 /Ba1'::g./ 2002 on the premise that the following two SIiubSta21.i;_iaIVvquestions of law which arises out of the order Iriidunal has been wrongly decided by the Tribunal. '7 to pay advance tax as contemplated under section 208 of the Act, the question of levy of interest either section 23413 or under section 234C of the ~ not arise as the levy of interest »~un4c1eri_:

provisions of law is only on the tailureppoflthe conform to the requirements ofls»e:ctionsV' of the Act and as in the case" there'--being no requirement under sections Act the liability for interest' 2340 of the Act also is not any levy of interest is illegal and not

3. In the case ofVv'theeV.'.as.s"essee in this appeal, though the asseéisee'*itseli;l liasvconceded the liability for payment of._adyance--,t'aX"ai"id__ for short payment of installments of tax liability to be paid along with hthehreturn. andon the basis of self assessment in terms of 10 of the Act and had actually calculated it .i__i*1't'e1'e;st in terms of sections 2348 and 234C of the Act on $33-charge payments for the delayed period even in terms aﬁspt-:'{'t«1 OE.-'._'i',}'tﬁ*'jj'i'}'121t'E"€'1* ;)t11'pn1'1'i1'}g__'_{ to f.bIi_ow the ('Iec1'si0n "'c"if*fi_tuai»ffs* z>(,u._trt' in":11t~ (I.'.a.St-' of 'KWALITY BISCUITS LIMITED "«.§:s.{1 .(i0imm*ssIoNER OF INCOME TAX' [243 ITR 519} z'11";«cE 'xx-"it}_1 the E1'1<":c'>r11c 'I_'::t.x 1'\1)pc'iIz-11.0 'I'rii:)1.mal 1'12:LVi1'1§{ 8 of its own £.'(."iLll"I1. but. the 2a.<ssos9;<=--'L? 1121.54, }'1('\"CI'1}"1Cif;'55'S. r'n'c1d{;' this am iSf~'31.lt? b0f()re t'i"1c=* fi1's+;'£. 2,1p;')e*Iiat.c 2t1ut:h01'it't.y as the ;~1::sscrssi1'1§;{ mI'i"i<r@1' hetci (:ieE't*1'm1'm-'(:1 tin? tax i1'2':1I3iIit',v_\,Vf' t_)':.f"'..

rm-.~ a1ssc's.<sc*c on t_.}"1c (10111put'at'i0n of i1'1c()me 1.1nd€*1'__;§é(r'$:Eftt-ti ;_. 1 I_5JA{ 1] of the Act to be 2--m an1c;)m'1t, i'1ig-»,fAfH1cr:' 21SS€SS(i'C it's;c*IfI1ad (.'1&:(:Iet1'cd .2-md mt: :=.r,A_:*4():1f<,t'~ (.g&"::t%'::1tEty 't 11 port Elhﬁ' 2-tssessecz not. (July to p21f 1'«--}1 t).':i:i'(l._t'1VC£E?V13$ but aiso had lcviecl i1'E1.('.l'{:'.E}1. t11'1CiL?f"-.vS&'£':t'i(i)1'1-S Fzmd 23-4C of 1:11 9 Act' in--r{r'sapje;rc'1t' ¥:_>t' ti 11¢': ci't'«i'I'E':'1'-'t{".nptgfand therefore the assesst-?e ('.()11:t.t1'a__.-:"'_V_ t.{$'*it's;e "'(2TfWt'tf' tz.r'ade;'st4a11d111g had filed 2.1.11 2-tppvai 1.§)'Vé~f'c')Tr(~tA e.iff)V;.3:'_}1z:..t:£-? E-11.1I.1'V}:V(.}1'iEI_\,f and had made. the (}{1.C:'SIJ'()1'1.'«(.)f' jL181§l;i('Qi.§()t'E.__ .i'7(}1'" levy of i1'1t'.c-rmst under scrtriitms 2348 eltitti ?2I.*3~4¢;"; (if the Act. as g1'c_>L_.11'1(i and issue E11/,}I'(ti:"'t~: t.I'1"(*-- é§11:j.}"';9IiE11:c* E1E,lE"}"vt(H).'I"}'1.}-'.

4. L"'¥'.I'1:t+*'_ f"j1z's.vtf'+."::1Jg>£§'}!'éitc- z'mtI10r1't"y aIi0wc('i the appeal on 10 under sections 23413 and 2340 of the Act and short payment or delayed -payment of advance tax and assessment tax in situation where the assessee}; . for payment of tax is determined in _'_rerrns oi"

income of the assessee having been:":.art'ifieiall1yl under the provisions of section ofthe

7. It is therefore on Sri. Seshaehala. learned senior appearing for the reVenue,4'VE_-Sri; counsel appearing for of 2005 and Sri. Shanlear, appearing for the assessee in ITA No.32{}_ "of " We have examined the submissifons" and l131V_§3____OpiIl€d as per the discussion beiowi, V' * V8. 'Su'bmissi"o~np'r1= of Sri. Seshachala, learned counsel the revenue is that levy of interest in terms 23413 and 234C of the Act is automatic when onee lgthere is short payment or delayed payment of 11 advance tax installments and self assessment tax; that the assessing officer has no choice for not levying when once it is noticed that there is a delay payment in paying the installments of self assessment tax; that in terms the Act it starts with a non--

the total income of the asse.sseepVoforV:..the"'~releyant..prei/ious year is by fiction deemed to to 30% of the book profits of required to be computed in' the Act, there is no escape the operation of the provisions 2346 of the Act; that the extent of _operat.ion.V'of 7_nori--obstante clause of section '1;5.JA["1}':'oif*-iihe Act being limited to the artificial manner ofbloflttotal income of the assessee for the 'n""l"assessn:1_er1t.~ yelaprdin question and in respect of all other allsiother provisions of the Act being' made 4apbpli_cab.le and operational is made explicitly clear by sub~ it {4} of section 1153A of the Act; that the provisions 3/,.

which Judgment, the Supreme Court dismissed the revenues appeal and in a subsequent case involving':le§f$r:"*.a' of interest under sections 234A, 2348 and 1. Act where the assessment was under" the of section ll5JA of the Act, the Bombay High Court in applied the ruling of the the case of 'COMMISSIONER or KWALITY BISCUITS 434, that should be 'present case also;

that no understanding the question of of sections 2348 and 234C of the Act ..wAhetl1erA itnis 'a case of determination of total 'under section or under section 1l5JA of the Act,,_ l question of the legislative development

-.t.l.l'_j3o.flsection" _l'15JA of the Act having come in place of sectiocn_l:'A15J of the Act by Finance [No.2] Act, 1996 with 'e-téf:ect_5 from 01.04.1997 and section 1isJA[41, 'é)i* tax on se_E_I"' -:-;:SEt.ir11a.1I_é()|'1 2;11<::>1"1g§ with 1:I"1t:: 'c1(*.t:uaI l'€i?1.L1}"£'1, "i':1'L<:)"t*hi"11g was "chic. 10 the Static I:)ci'():':=> the assessn'1c:r1t: order 'f.)z~1ssc---;3~A" by the asscs5s:'I'1;_2; <")3"f'i('.cI' and ti'1<i-*.reforc.* no 21 payment: was in 1.116.'. :1a1.m'c of $al2=u'y or ()ThCl'\ViS€ anci thcrreforc me e:st:i1n2:1!.i()1'1 WdS not ('tonsequently no i1'1t.<-':?1'(%st 1.111(.'1cr s<3c"'t.im1 2534B -3' IE-rV.i.(-.*d_]. V V

17. Mr. Sha1'1ka.1* has also S{E'DV£ Iv:1'i1',;I"(3dV"

i.lI'1!E.'.I'(".SI' uzlcicér secfi(')r1 23413 L)? AC1:

E'Jei11g" ('roI11pensa1'ory in 1'}E:1'{1.£1'€.5. IA1'1_:'S§*'(:.E(51.11_.d a.t?jsc ;<.)nly when an anlount p21ye1bEe"'A1;(j'--t:l1£é "«11aaS_"--.I1_c)tf' re.:e1c.hed the Sti-l.1.C'., but in thé-:3 Lie.-Em V't)'i""-.;;).21j;r~:j-yaht .of {mi on c:on1put.ati0I1 in T,t'.1'l11S _ f'l'It.'VVVAV(".1", the liabilrry for payn1ent a|*ises '0n1y_2i1"i_i;<;:.2."i':~1_1E:'~.ci'ct.c1'mination of the tax liability }.>§_z"..1T}'1e 'a.:_-;sc=.:e:si1[1g dfficécér araci t.he sc.tI"1en1e of 1J :-iVy.1i':'e1¢'T1tV'"(ii '€;'£t;~: in 1.cr1':I1:§W(5i' sc()t:.i.(m 115JA of the Act not cant;£em.p_1~31_i;'1.§'*«._pé13riT:3érxt. of E?iU'1('1' iI'1.<sta11:11e111'.s of aclvance.

1.11 A »._t}his,- .;~¢5g;.1.;-(.i. Sn'. SI1z:11'1ka1I'. .1e.ar1'1cc1 (:0i.ii'1s€] ""{7§.p'fJ§}éi»I'il"1g i'(.$1*,__t,:i1c? aSs<;'.$see has 1:);.*(.)i,1;_);i1I. 110 mn' noiicte the "B()"2'::1jd-..(Iii«ifC1fz}e1.i* No. 13 of 2001 daicci 09.} 1.2001 issued in 1.1".-§%".x:f2i.i§c? of iI'1f,f()d1.]('.I..i()}'} of sc=:ci3'(.m 1 .1. {SJ 8 of I:l"1e Act with 24 Fil1'c"1I'1(.'C.' AC1. p:r()viding__{ for the rate of payineiii of advance 1'21); only 21;t"£.e1* Elie mi11irm.1m 211tC.r11a1'.i\»'e 1,ax s(*.}1eme provic.10c.i for 1'.)(.)si1ivc'. £:1S('('.l'1E-1i}'1}11E'"1'i1 of tax sec1:ic>1'1 1 NM B of the Act" by ii1di.(é;.1ii;-1;; that it A book profits if ii found ii1'::21i' 1110 lax 'DEVI. f il'}(',()1'11C as assessec:l in 11110 I'1()1'I.T'i£-ltl coi.ir_sé !e's.5y.i;1aari;

'?1/2% of the book pmi'ii;~.;s gziici 1'I':1:3"'f1'1'£.;.iin'ii.i.n1 i.21,Xv"p21'jr21bIe haviing beeri movideci for in ~i:.:.sAcj-*('.:1'i.'vi()ii':3'V i_ t_'_:»f the Act itself. it: is this itygii;\..,/..\5§.r11i("§}) is --..éin'plA{)ji&d.___fg3« support: the submisjssion iihdf l:}'1,é"1*§;*.V.Vi.'s*'~~i.1(5'5ifec 1't:i1.'ic:n'gc'i'i1" of payment of .':ld\'EI1'}CC l;a>:.' or _seI§_E-sifim'eiIii(.):i1 in I.C'.}'TI1S of SeCi.ior1 I ISJA of t,he'Acl* .21}s'o_ 'k"3.'.'.a'.:"v.?\TEV1':':?-.'_ﬂ1*f:" case in se(ti'.ioi'1 11 ESJ of the A01" and 111ei'*ciT()rev 1110- qw1.1esi.i(.)r1 of levy of iritcrest i,1ii.1_c1ér- seVC::'i'i.oiﬁ"s 2348 eiriti 234C of the AC1. does not arise at 2111.2. V' 30 of interest in terms of section 2348 and C of the Act, in so far as the quantum of tax liability arising out of tiie application of the provisions of Section 1 15JA of t1(1.e_* concerned, has drawn our attention to the S' matter to submit that when the J compute the book proﬁts beforeythye erldyof the period, there is no way of and offer 30% of the it is aiso not possible to Aprecisely:hfioniougte"'th'e'S':Vinstalments of advance paymentjof and Jsuﬁch alsituation, it is not at all reascjn'aljl'eeu.:to Section 2343 & C, for the reason of advance tax in any view of the of the requisite amount as in 207, 208 and 209 of the Act and in 2su}V3p0rt...:of.'1:he._.subrnission, seeks to rely upon the 1VVI"L1li1'1g Aoifthe' 'Uttaranchal High Court in"the case of CIT " ibs..V%'s1;pco INTERNATIONAL {(2003) 264 ITR ~iIr1 that said case, the Uttaranchal High Court had-~o}:)ined that the levy of interest in terms of Section 31 23413 of the Act was not reasonable and therefore the tribunal was justified in deleting the interest levied on the assessee under the provisions of Section 23413 of the Act and the same logic will hold good for relieving assessee from the liability of payment of . the very provisions i.e. Section 234B, "even in"a"s-ituation where the advance payment of falls: short requisite quantum of payIneiit_V"'~--r$11d the liability computed under the provisionsV_ofliSf:Ction the Act. In that case, the court had while agreed with by the tribunal to delete interlestlunderg chosen to give its own reason i13--.placeu"ofV the reasons assigned by the tribunal *ind'icati"ng th=at'" the assessee ~-- an employee -- had been receiving the employer inclusive of certain Iv'a3riount~4.rece-ivetd' by way of perquisites for supply of food, ""--:i.'}§'everage, while working offshore on the rigs and if the perquisites had been added as part of his T salary and on which premise, the assessing officer had 32 computed the income and the estimation that was required to be made by the assessee and finding that the advance payment of tax, which in fact had been at source and remitted by his employer, was falling V' of and for that reason had also levied.intere,st"Vi1nder} Section 23413, was not justified, for 2 value of food, beverage etc., to.Vthe'aVS:S.€fse'eV the employer while he was.}vorkingi.nonVV'th_e offshore' rigs b1i't.Vt'a__ necessity cannot be construed as peifqu'iisites,_._ provided by the employer therefore was not of and further even in the hands purpose of deduction of tax at source, as to such value of so-

A constitutes part of the salary or otheravisewipbveving' bi actual position in View of the :"1rconﬂicting_ vi§vvs.1'~"taken by the tribunal itself on this i " panzd'vu;1timately, the High Court virtually chose to argument that the advance payment of tax even -initerms of the tax deducted at source and remitted 38 probable income and in turn probable tax liability and also the possible advance payment of tax.

31. This argument does not help the assesseei:formtlie it simple reason that the circular had=__bee.nz context of introduction of the provisionseo'f"Section._:i:

of the Act by Finance Act l_ of 2000] with effect from cannot have any bearing on in terms of Section rate cannot regulate or eyeri the scope of the provision.

32. Secondly, ltizeiv estirnation of total income for the purpose :'pa3rrn'ent of Aaldyance tax in any situation being an lestirnatioii-.._pband._'¢%2ven earlier the rate of tax being V7ﬁ"provided Finance Act, whether for advance of: tax for the current year or for the A'-»4_'ass'es's--n'"ierttA year, the situation cannot be said to be 'dif:fere.n--t for the purpose of estimation of the total income 42

34. We find one another reason as to why submissions made by learned counsel for the assessees does not commend our acceptance and that is the the logic and arguments on behalf of the made by learned counsel would leagiutolan situation of even assessees who complied with the requirements of ._l]_:5ay?i-neznt of installments of advance ._egst.i:rnatioVn so long as their total income total income computed under .1"l«5¢lA"£of'"the:7Act..Vbeing absolved of all such' tl'ieV."1nomentll it is found that the total income. 'computedglaittificially in terms of section l15JA of the v_iVsihi--gh'erV'than the total income of the :ass'esse'e. {otherwise computed in the normal course. We say' that if the logic and arguments 'advanced on of the assessees should be accepted, ""--:i.'v':eVassessees:' can claim a relief from the operation of the prot?i.sion.s of payment of installments of advance tax and estimation tax and paying it within due dates even in 44 of the assessee being Rs. 100 crores and not adheringto the requirement of payment of installments of tax and self estimation tax.

35. Such an understanding not incongruity but also leads to a,'situatlionll\2vhere'lV'it;. about a discrimination between are compelled to conform to payment of installments of advance tax and facing the requirement vis--a-vis in terms of section 115JA of :t__he__ '»'ii.evertheless escape from the consequenceof:_'urioV;i;'g;d.heIeincieé to the very requirements vvhich 'Would lothervx/ise conform in respect of tih-eiriiliabilitviassessed in the normal course. Itis a well settled. 'interpretation that any interpretation of v7?'_a provision which can lead to rendering the provision .1-.'ut:'e.onstitutio'nal by attributing an element of V."~4"_v~.discriniination should be avoided and it is for this reason H ' reject the submissions of the learned counsel for 45 the assessees to interpret the provisions of sub--section_,_[4} of section 115JA of the Act so as to understand can operate only in situations where V' procedures are provided for underV.:the-..Act_:

respect of other provisions of the niagrpidliave effect of creating a burden or iiabiiity or tl1e_s,en'se"Vcan be described as a charging»-s.ectio;'1;" = it

36. When once suA}3_--sectiAonv:.[«%i.>] of the Act cannot be a:r1d€:.h.as_..VtQ"' 'oewinterpreted as discussed abovegathewre is _prioA"escape from understanding that subsection 5§§A of the Act does make a difference in__'cornpa,r.i'sonVito4the provisions of section

115.} of Act and adiefiniitely ensures that except to the e9xtent:=oi" thei.par'tiﬁcia1 calculation of total income as provid~edh*--ir1 [1] and [2} of section 115JA of Vv*,_theVAct, provisions of the Act inciuding sections ;no'1*'-._23;iC of the Act applies to every assessee enivi'saged'Awithin the scheme of section 1 15JA of the Act. :3; ,,,, 46

37. It is for this reason, we hold that the respondents ---- assessees are liable to pay interest in terms of sections 2348 or 234C of the Act and the assessing officer as vtfell as the first appellate authority were right in whereas the tribunal was in error in thinking V' was not leviable in terms of the J case of 'KWALITY Brscvirspp COMMISSIONER OF INCOME VCll';*li'K'?grepo1'teCi' 'I'l'R

519. . I. 2

38. The arguments on the the provisions of g sections 2348 ~'Act is in the nature of cornpensatoryepaymenltrlploriloéss suffered by the revenue and therefore in a' 'situation where there is no loss to the rel/enuel vthe'A«pro'vis_ions of sections 2348 and 234C of the Act not is an argument not acceptable in the present situation and the authority supporting this propos'ition of law are of no relevance for two reasons. _l§'ir'st'lj,{. as to the nature of levy is taken into question for Agtiiaderstanding a statutory provision and while examining §/

b) 50 assessee as the computation of income has been made under Section IISJA of". the Act?

Whether the tribunal was correct in V' irrel--eu__ant"'~., « into consideration circumstances like 'bona "fides j4O_f the A assesseei 'whether the, defaiJ.lt;

committed deliberately' in falling to' pay «. it advance tax under Section 20.8 of the when Section 234B '-v.irlt.erest is 'V.leji_vied automatically as there is 'no discretion? V? The appellant in this case o;fan'~--api)1i.cation dated 08-09-2008 has raised substantial questiéns gioflaw' «-. 1 _V 0} Whether'--- the Tr'ib_Linal.____was correct in holding:ithat'7'the_transfer of soft drink unit of the Vassessee"'~.w'as' a slum {sic} sale, when the valuation of the assets * beengt-made by the expert _v_aluer" before arribirzg at the total sale Vt jgconsideratiognfor transfer of the unit? the Tribunal was correct in there was no default u/s.

3,208 of the Act in not paying the advance A tax o_nj..--the ground that entire transaction " Qf" sale was a slum {sic} sale and no capital gains are chargeable, when the it "pglevy of interest u/ s. 234 B of the Act was " -- _ rnandatorg?

_    additional

: /V"
a



51

ITA Nos 325 and 597 of 2004 are by the assessee. While ITA No 325 of 2004 by the assessee is also against' very order dated 8- 1-2004 passed by the tribunrﬂ} 1 V' in turn had allowed the appeal in part and 2 part of the appeal which had not 'by.

tribunal. It appears the assesses had ' pifefe'rfe'd"

miscellaneous petition subsequent------to"p_:t.he-.sordef p'ass'<::-d by the tribunal seeking for and to allow this appeal 'V full to be rejected in termgsuaf ::«'28:6:2004 andéthat order is madehlllsuabﬁzctlliltnattefof appeal in ITA No 597 of 2004. In these two the assessee, the following further substantial' qtiestioﬁs of law are raised for e:;'an:inatioh:i,t_'-2.. A _iTA icgf 2004.-

a} A the tribunal was justyied in law 2' :'a'.ho£dtr1g that there are no mistake apparent from the face of records on the 2' '*~.fact's and circumstance of the case and " -. application made by the appellant would amount to a review?

d} V. _consequently '*.co'nstitute mistake' rectifiable under Section 254(2) of V' - the ihcorrie Act?

Whether the tribunal was justified in taking that norvappiying of the decision of " >7 the Hon'ble Supreme Court in Apollo Tyres:

in 255 ITR 273 would not constitf1te_&'V'...__9' 5 apparent mistake liable for rectifica'tion.ATV""s."

under Section 254(2) of the Income ._ Act?

Whether the tribunal is jusii hoioiirig «. "

that the surplus on-._ the ' sale qf""the_ undertaking as a who'l'e_ require's~._to: be" A credited to the profit andapvhloss account in accordance with .part--,-H' II " 0 f Schedule? VI of the Companies Act; 'when. the case is not part and parcei of*th'e' woricing 'results and consequently . ivheth-er' such; 'finding constittttes "app:are§n,t.,'TniS onlj' the facts ofthecasc}? t 'the * S' tribunal that Vthei'irar1tsac'tiVo'n,_Qf.isiump"sale is taxable for V'the._assess'tr1enTt'y_eG-I 1999-2000 when the provisions'Qf~Sec_ii0n..--'50B of the Act was introduced' from 1-4«2ooo and an apparent :m.ttt.;stag 2004:

the tribunal is justiﬁed in holding zthatv the transaction of 'slump sale is taxable when the provisions of Section " 503 of the Act was introduced from 1-4-

2000 and thus not applicable to the assessment year 1999-2000?

b) C)

e) 53 Whether the tribunal, on facts of the case, is correct in law, in holding that the capital gain on the transfer of entire_"'="ﬂ , undertaking as a whole has to _jbe« computed?

Whether the slump sale a;;noun,t receviued on the facts and circurristance" ' the " it appellant case constitute capital receI12t?'* . 2 Whether, on facts ' case, is the tribunal, justgified in"ia,w, in? holding that recon."ap'utai'ioneA.._ by "the assessing officer? for ;,jihe""V-purpose of determining book profit Section 1l5JB of._the A(:~t,~.is"vin--accordance with law? . ....

Whether,"-th'e"}surpti:s" the sale of the undertakingv as "o._'uJhole requires to be cred'itedf,to andwloss account in o4:cordan'ce"~-_, 'w_it:'-1_ "part-II and III of Schedule'~--\V/I' of.the__ Companies Act'? V.Whetherl1;'he..'-tribunal is justified in law in holding thatthe decision of the Supreme "Court in caseWofApollo Tyres Ltd VS CIT W in' 255V":TR 273 is not applicable to the f L' ' under:

V appetiarztfs case?

g Brief ..rﬁi:'1.in1um background to appreciate the .1 eircumstaiqee H and the manner in which the questions 'l_e.r_ose for our consideration in these three appeais are as Q' V /,4 59 4,98,I0,058/-- appealed to the commissioner of income tax {appeals}. The assessee had contended that the computation of total income of the asses:-gee "

55.4~4~,90,899/-- was incorrect, but alsothe of total income of the assessee under the provisio11s"

Section 1 l5--JA of the Act coniputed "at; a 14~,35,83.002/~ is wrong, by the -- Vs'al'e' as a slump sale and further conteI.ided-that__.thef.leVy of interest under Section 23«4.B':of_'the§i'\ct V

48. All failed before the appellate was dismissed in toto as per It is thereafter, the asse,s§§.e'e.o'~being by the orders passed by the assessing the affirming appellate order, before the income tax appellate Htribpunal. if z .jf"he.'..fe"tribunal, under the impugned order While with the View of the assessing officer and the 60 appeilate commissioner to the extent that the sale was not a stump sale and for taking this View relied upon the ratio in the decision of the Supreme Court in the ease COMMISSIONER OF INCOME TAX vs .

CONTROL GEAR MANUFACTURING (,'>()Ila[PA1'v':r.4_: 1j(1 9.é'7)_ _: "

141 ITR (so) 302], as this decision ttyasti-att?i~tt't:tt§a§ ta facts and circumstance of the 3 that the ratio of the decision of the case of COMMISSIONER " pus ARTEX' MANUFACTURING co [22 _7VAI:i'1;v attracted to the ufh'f'3v'£I31'f3S€31'11L case. The tribunal furtherfact situation prevailing in the case of a:SSeAs'»3\eVe""fattracted the ratio of the cieeision-itentitereri b3tthe"'i3ombay High Court in the case of INCOME TAX vs PREMIER

7. i:"teAAUTOnIODILI12s f1;TD [2006 ITR 1 (DOM), the decision of " 'mutt i'ngsmvD1cATD BANK LTD vs ADDITIONAL 44:'--'.V.COiiﬁ'MIS_.'§'IIONER OF INCOME TAX [155 ITR 681] and _p£_ecision of the Delhi high court in the case of iv_;"c3:i7re-:(t01'(i@1111(.?J~'13.}:5'i.c for ('.m*1*c-:c'i.i01'1 1.m('1e1* Se(.:i._i<)1'1 254(2) of "--«tft;'c__A'<».?i. brztzz n::'a;,«' be 211"] t',l'I'(.)}.' 0f0p.i11io1'1 e21r1d 1:112-21. ctarmot.

'1--><:>"(?O:c1*<;:(ft_§-$(1 in 1'c:<_:i:.if'i(*a1.ion ;'1,Irisdi(::1:jc)n emd !:h.erefore 62 (110 asscssc-.-.'.(';' for 1'e.('1.if.'i('afion of the oa1'I1'(=-'1" orcln-r1' on. the p1"en'1isc than the 1.l'ib1111&.El had ('.()I1'!I13iiI€*C1 a mistake. in 1}§)1 foi10wi11_g_§ and appIyi1"1g3; reztio in Elm (:ie<'isi(.)I1 S1.1preme Com 1'? in T116'. (:2-zsc of APOLLO TYRES COMMISSIONER [(2002) 255 ITR 2731,:___1;c exemlixleci I41'1is qL1(?SF.i(')I} an(hl 11()1'_i('i1'1§:§'1~«I.1'1§§t"*~ though had cited 1:1n's. deCisi<m S'1,1hi*¢%h1a:

@E1I'1i(?.']' and Hit". 1rib1.11121! had Aim eX21i1'1:iv;..1ed/I the applicability of the S£1i"I1€.H" 'and' 1'i'(3{i<:ir1'gV that the juc1gmc'-7nt of Ihhéﬂ the Case of COMMISSIQNER vs VEEKAYLAL INVESTMENT 166 CTR (BOM) 96] was n'1<)re:2j;1p1. case. having expressly re;{]Sét:--1:'e§.i m_ of it not as though the jt,1dg§"1:,1_ci11t'_ uSufii:1*s ﬁ=.<'_)i1j.: any mi st:al<e app2u'em' on the face (.hliQ§i:h1'1i_s_s;{2(hi the 1'ni._<;<rc-'rileulcous: p('E.i1.1'0n. 11'. a«.1ge':1i11s1: t.hi:_+: 65 book proﬁt of the assessee on the premise that the cornputation was not fully in consonance with the requirement of Pa:rt~II 8: III of Schedu1e~VI Companies Act, 1956, in the wake of the I pronouncement of the Supreme Court'«i;_1 APOLLO TYRES LTD [supra] etc., the substantial questions as indicated raised for our answer in appeal'

54. The other question of interest under Section situation of cornputation of terms of the provision of Section 115iIAt:_"4of arises in the present appeals,.é:Isoc'~at the of the revenue, has already Ijeen in the appeal of the revenue [in ITA No 'hand it has been answered in the negative inﬂfavour of the revenue and against the 2p=.:assesseIe',«,hoIding that the interest under Section 2348 of I and for that matter any other analogous provision VI'-V.is"'attracted to a situation of computation of tax under 66 Section ii5JA of the Act also and that the circumstance which can be explained justifying the delay in payment .__of instalment of advance tax or payment of 2 tax are of no consideration and the statutorily and is automatic on the requirement of the relevant provisiolﬁihbit ' therefore answered so in the prese='n:t'appealsV_ that the tribunal could 'deletion of interest levied under On the premise that the;_"assessee had; a" explanation and justifieat'ito'n;ti'or the installments of advance ta.>}_in«.timeVvp'ayment. It is held in this regard that the 4lqu_esticntis not one of offering explanation justificiation "for eithershort payment of the amount or delayed_:. amount, but one of applicability or 1'non--appl_icabiiityr of the provision of Section 2348 and AA of theatkct etc., .to a situation where the assessee's tax"}.iVabi1ity is computed in terms of the provisions of IIESJA of the Act and once it is answered that levy 70 assessee in terms of the provision of sub--section (2) of Section l15JA of the Act was not strictly in conforrn-i__ty with the requirement mentioned therein, does way detract from the applicability of the ' various sub-clauses of the explanation"'a'ndg_ submitted that the tribunal has rightly taken by the assessing officer as.V.affilrined the appellate authority, but has aiilenbr in thinking that the sale and that on the fa,CtlS«i..§:l.I'ld vvofﬂthe case, there is no scopep~tori'l1o.l'ding':fthe"transactyion as a slump sale.

58. We having perrriitted revenue to raise additional groundsand *atdditi'on.al"questions in its appeal IITA 320 of 20041,: the revenue-- has raised an additional question as to was right in reversing the ﬁnding of vlﬂuthepassessinggpofiicer and the appellate authority that the 4: -tranjsaction was not in the nature of slump sale nor was it a__transaction of the entire assets and liabilities of the unit a. going concern, but a transaction whether only some 72 context of transfer of a capital asset resulting in capj.t__aI gains and even as submitted by the Ieamed the revenue as weil as the assessee, we ﬁnd V' deﬁnition of slump sale in sub--sectio-{T42-rC'hoof _.sé¢+_51fOnv of the Act only with effect from 1--4--2ikOQ:O~.t'_i.as inseI't.ed the Finance Act 1999 and which asV.undert;:'._:

2(42~C) 'Slump sate' t_the'"tr_ansfer"'oj"

one or more undertakif'igs'.'asj_'a"'resutt__ of the sale for a lump sum .Considera..t;}on_f. without values being assignedrrito . the in» ' _ividua'i''.v assets and liabilities in_s'_LtChIsal€es.i ____ H Explanation} "For, ;.of this clause, 'undertatcingf haige_ the meaning assigned to it in"expEan{a_tion.}V I inetqause 19--AA: Explanation 2;." jjFor'the«.ren1oval of doubts, it is herebydeelared t?}.CI't.'ﬂ_.t€ determination of the value _ of an _'asset "or" liability for the sole pur;a}osei'~of payment of stamp duty registration ' "'v-fees or?-jother similaritaxes or fees shall not be v_ .rega'rded«,as assignment of year commencing

-_.on__e. tirief-.._15-* of April 1965 and any subsequent--assessment year means income for cha!fgea,bte_ under the provisions of this Act and Q in relation to any other assessment year "income-tax and super tax chargeable under the fprouisions of this Act to the aforesaid date. sr even I1f}(_'."2.i'a}:'iS;(€:':T of 21 unit as 21 gc)ing (_.'.(.)l1(',Cf'I1 is not '51;_1e(_:c:ssz=:rily 31 t(?{')I'1V(._'.]1lSiVC (".ElSt" to hold thzuf. $110 i',r211.'asactt',io1o1 c is :21 Si:1mp~.se1le.

73

61.. For {"1119 2.1s.s;ess1'1'1cz'1t' in <;1uesiio1"1. we do 1101 fi.1'1d any st:atu1:<)1*y defi.ni'£io1'1 of slump sale 2:-mci ev(=:z'1 zrﬁer 1h1'oug}'1 21 good 1'n.,1mbt:r of' '§11cig;{zI1e1'1!_s re1'1dercrd ;. courts and the $supre11'1e court: on 1:11¢mgues'r'io1';' (3()I1S'{i1'.l.1i',('.S 's1_ump sale'. 1'eI'errc=d to a1':):'<:)'\re3::'e1J::1};il by the learxwd c*<:)1.msté1 for tllevfcé«x{o1'1o--€%-.. Vwc2'1:: no (.'.1E?E1I'. emphatici 13rc'-*(t1's__oL:}fnoe~;;1_j_ng.of§1voi"oj{§tioI1 of 'slump sale' emerges. 1 .

62. The pi(_?f1_1rc'_ié::,V re:1:.ﬂ;rr..}ie1z'y 1ﬁs:l)L1,loL1s. The only i1'1fere.1'1<_>c t11af_ the question to wh(>t,l'1e:*.1' II'1o¥}A.1";1_11':§;io1'.V:q'}I1i i'::':»bi'I'1_ji'1'}(:*'11'§i1t.1.11'e of slump sd.1e or o1;he1'wisc h21s 1Toj_ bo_oVi}'g:i'51'oci o¢1('.11 (12186 by looking into CiI"CLi'I1}.§%iiVV§y"'}f'?:tT of HIE'. case. circ>u1nst2m(:es 1'.héI{'_ lntfvo pl'(ff{T€(fic'.(Ir"'E)§)f()I't? the t1'211'1sa(rE.io1"1 in questf()n arld

63. In some cases, on examination of such facts and circumstance, CO1H"iZS~ have concluded that it is slump sale Or not a slump sale. In the foilowiﬁg H whiie the courts have concluded that-ithe-fDra1'1Asa{Ot:iO:1 74 in the nature of a slump sale:

V COMBHSSIONER Of?"--v..:'I'I'JCO1$.ﬁ'~T}1V;§f:.'V"_= T NARKESHARI PRAKASE AMLTD. «. .1196} ITR438(B01|4]!:"~..V_ -

COMMISSIONER' ' OE u.

ELECTRIC CONTROL co.

COI|ﬂ$ﬂ'SSTOf¥ER"v:E'ﬁ'.OuF=. v.

BA NGL'R._8&$' C0. [57 ITR 299 (SC);

15RE§MIER; '*'vAUT(§MOBILES LTD. 12. INCOME-TAX EOFFICER AND ANOTHER _ [264 1:12 1.93(BOM)1 °pND F1NA1TOE'LTD. v. COMMISSIONER

- T OEmcOME~TAX [252 ITR 491 (DEL}] 7 in Other cas.OS Such as:

DEEMED AUTOMOBILES LTD. v.

V ; INCOME~TAX OFFICER AND ANOTHER ' * -- .1264 ITR 193 (BOM]] CIT vs SEDCO FOREX INTERNATIONAL [(2003) 264 ITR 320] 75 COMMISSIONER OF INCOME~TAX U. ARTEX MANUFACTURING CO. [227 ITR 260 [SCI] COMMISSIONER or INCOME/FAX 2 2' 2 ELECTRIC CONTROL GEAR MFG. iii" A [227 ITR 278 (SC)] some court's held that' ii is not a sl1,zr1*1p'1«sa1i:r;§§'"2

64. Even on a t,.r::1.ns21(;tif--c:§I1' and cc)11cluded in the 11atur<;f of L:'j_-'}'t.i'1':'.;.1p' th0Ué§h there is no lie1bil.i41jy{:V of cgzpiiiai gai1'1s _ that in all situations sfsl~;::x1fV1V212'}'j.f§i§1lc:»;'"V2_A§::'(3n1'pé..1tatzion provision for aS(,'t?l'1',£1illﬂlﬁflﬁ' terllls of S€('.ti()I1 48 of th .(-: ACi' wc)r1<a-V1"}3"l=s>V;:v§py:ii1c% reason that one o1'"1:he two am'o1.1ni.s--.Vi2...,.V f{.,1i'}._V""El1_'L1€ of the c()11side1"ati0n for which the asset \-VI§1.S"v{PENI"£E§vi7€§};Ai:'(€(i or the c(>$t'. of acc.11.:isit,i()I1 of the and 21:11.6" cost of any c0n1p()m2r1t, of the asset that" the c €xp(:.1ﬁ€fi1:i.:'rc incurred for effect1:.ing the t,raI1sfe1' is not 2"_asCc1"t.a1Vi;'1abit? and l:he1"eby tl1e cl1a1rgi1'1g se(:ti<)1'1 Le.

VVV2fL"-S¢'(;§€,£.c)1'1 45 of ilhﬁ? Act. f2;u'}1'r1g due to in1p()3sibiIity of 76 computing the capital gains in terms of Section 48 of the Act.

65. The inclination and fondness on the "

assessee to characterize a transaction as'-a notice on a perusal of Various cases Bar, is only with an eye to of of Section 45 of the Act andi' uncler Section 48 computation is not possible: it .2 A A

66. In this regarti;'f3fe have thiatiit is merely a charging sectionsiikeii 45-A_of"tVhe Act providing for levy of tax vonicapital fails if the machinery of section forcornputinghithie. capital gains is inadequate and I-even. pa"'isitu.ationp whevryemit is impossibie to compute the of Section 48 of the Act, but any E°"'V'other ch_argi~11gVi'4i'section also meets the same fate if the matter of the charge is either not precise or is iinascertainabie. may be due to a variety of reasons, in A the-»i1*i:stance case, both the assessing officer and the first 83 receipt and whether there was justification for remanding the matter to the assessing officer for determination of book proﬁt and as to whether the surplus in the A V' the undertaking as a whole was credited to the profit and loss accouhtt in Part--II 8: II of Schedu1e--VI to theféoinpaniesto whether the tribunal wast....correctVVv:..i;1hoiding"that the decision of the Supreme ARTEX < MANUFACTURING_ econ, isupﬁii Vaippiicable to the case of the appeilant., 5:» -I d d

74. We notice itself arises in the context of the'*-- o.f"_;Sectior1 IISJA of the Act, because ivassessing officer has not accepted the com_putation_,vioftsiéable amount for the purpose of Section offered by the assessee and as determined the assessing officer.

_ he assessee being conscious of the requirement of rwproﬁvisions of Section IIESJA of the Act did compute é/,. o 85 company to offer any part of this amount as constituted capital gain.

77. While the assessing officer has taken ' . amount shown as surplus as 'a resultriiofthe unit to be capital gain and has addedvitiintol' the assessee, even while computiiaijthe hook purpose of Section 1 ISJA, g-the rerrianded the matter to the assessing capital gain and then on the tax liability of the aisses-seelfor"theA"'year;l'even assuming that the transaction _V of slump sale, but nevertheless, A"res:1vltii'ig.'"sinﬁeapital gains, the actual arnount capital gain: required to be determined. It is this oi'l«the:lt-ri_bunal which has given rise to filing of appealsﬁbothv revenue and the assessee, with the Vﬂrevenue 'contending that the tribunal is not correct in that" it was a slump sale and the assessee it '4"_'jcor1t'enL:ling that when once the tribunal records a ﬁnding the transaction is in the nature of slump sale, the 86 further question of determining the capital gain does not arise and further that redetermination of the book profits in terms of the order passed by the assessing ofi'icer___is wrong in law, on the authorities of the Supreme the case of SYNDICATE BANK and ~ AUTOMOBILES LTD [supra]. i

78. It is therefore obvious that itself is aware that there are to the sale of the unit andfurtherp.tli'atn_:th§-._gssesse'e Cannot avoid offering or paying 'M the amount representing 30% ' profit as determined in terms of Section of» the endeavour on the part of 'Vaiesessee~--_i.'sL_to obviously avoid any tax liability hy_den:onst.Vrai:ii:r§'that the charging sectionie. Section 45 of the "foi?.".i';;iri*_:§i'g"ing it to tax for capital gain, fails in the presientvleasle, for the reason that the computation i'.~e. section 48 of the Act, is not workable for the ".'j-Vireasorsg that the sale price for the unit said to have been as a going concern, is inclusive of that part of the 87 price attributable to the improved business potential of the unit i.e. the assessee being put in an effort ove.r--.,_a period of years to develop a sustained profit V. drink production unit by its managerial value attributable to such value unit being unascertainable it bleingﬁriot apportion as a definite percentagetjor price to value of and building, plant and rnachinerv section 48 fails, for the of of the precise value/price" valuellvaddition to the unit by expansion networking system for the unit,_ tu.r--nl'resiilts in inability for ascertain indilvidual deﬁnite capital assets and acquisition of such individual capital "assets is assurning, the precise cost of sale of the very lldicapitaipgassets being not available. The computation resulting in failure of the charging section The efforts on the part of the learned counsel for 89 Section 115JA of the Act and not at variance of the statutory provisions; that the authorities that have come into existence in the context of the interpretation provisions of Section 115] of the Act cannot be . accepted to be an authority or as a it Supreme Court for the purpose of Sepction; Act; that in so far as the declaration ta»? V Article 141 of the Constitution of the provisions of Section 115tJ}\..V:of.thce taken to be an uncharted area and"the1'efor'e.V_it3'open to this court to the provisions of Section V by any binding authoritypand Stride judgment of the Bombay H:iVgi1. the cas'eV'"of'VSN0WCEM INDIA LTD [supra] cannot__mVa1§e*~..aiiy*-tiifference to the legal position and at rate---..being a binding authority on this court, this Scan. independently examine the impact of the of Section IISJA of the Act and can always 'Via'r_rive----at a correct conclusion without being inhibited by 92 being sold or transferred for a price fixed for the entire unit and not necessarily with reference to the individual or component assets of the transferred unit.

83. Further significance is only in the '4 transfer of capital asset if it can give gains. It becomes chargeable to'tax_as income' i d section 45 of the Act. The gains is as provided under section is arrived at by deducting from t_ii'eV__fu11i=v'aine: of received or accruing as capital asset the eXpenditL_ire¢'i'inctii<re'd_d"'wholly and exclusively in connection such ti'a11s'fer4'and the cost of acquisition of the and the of any improvement thereto.

84. H the income Tax Act is to levy tax on income to raise revenue to the State and the categorie.s of receipts which come within the scope and V" meaning of income have been increased and capital gain raised is taken to be income and therefore chargeable to 93 tax. The charge created under section 45 of the Act is to be effectuated by computation in terms of section 48'-of the Act. Therefore, unless the basic data of acquisition of the assets with cost of improverrielifiit and the sale price of the assets is;v"aiiailabl--e, cannot be determined. As in the easelof sale price is definitely aseertainabilef» The is also ascertainable but reniairied the same and an asset which Was' a price gets transformed bi3gger"asset_lWl*iich is a business undertakiliig sold as a going concern and also consideration for many irnponderables go.odWi1l""or a networking business 2 It may become not possible to ascertain the an asset which had been acquired K"Vir1itially'--~..__l1as~ been sold. Section 48 of the Act ieorriputatioiii. "mechanism if faiis and therefore gains are notllaseertainable, the charge under section 45 of the Act be effectuated. Over a period of time, it has been 96 basis on which the assessing officer had brought to tax capital gains resulting from the transfer of the unit asa- going concern.

88. in so far as this finding isVconcerned/',:'::~.é1l..:th§it-A authorities below have taken the View possibility for ascertaining the from the sale of unit as Ra reference to deﬁnite component capitalassetsg t.he-entire unit.

89. The assessi;r1g9l"a:Qfﬁcer was of gtheivview that on the facts of the blllpresient "7f,jase';».s.:the transaction in question cannot even-be«termed V'C}_ﬁxS11.}~.'--£"I1I) sale' as it was possible to ascertain the"'va1ue..'--ofassets both for the purpose 'cost liacquisitionl 'for the purpose of saie price and therefxor.eV attributable to the transfer of that l:Al"""particula_r asset.i'.~'though as part of the compendious saie nevertheless ascertainable and if so it has to be to tax. The assessing officer was himself of the it the facts of the present case were totally l 99 make it available. On such premise, the assessing officer concluded that the capital gains can be ascertained brought to tax. The assessing officer based premise had for the purpose of computation'---of' if income in terms of section 1i5JA of book proﬁts of the assessee the entire"amo1uV1nt.of' Rs. ~'~l3,16,50,812/- which the assesseejitselflhadfisholikgrn as surplus on account of saleﬂfof the compputedf income under section 1i5JA_ of the to tax -30% thereof and :§l33\4B"'of the Act and arrived at afterpayment of advance

90. 'l'he_--first léappellavteflauthority for the very reasons ifieur taken by the assessing officer feltllfthatthegitransacltion is not a 'slump sale' as it did not Ienvisage-4.__ the ' sale of all assets and liabilities of the if " ':{1'iidertaking'Vof the unit. The computation of capital gains "'«_°'.vas'deterrnined on such premise and therefore agreeing llveitiirv-the assessing officer opined that the benefit of the 104 proﬁts as as(_te1*1".ai1"1cd L.111d(>r 1.110 p1*0visi<_>r1s of £1116 C0mpa.nies Act. 1956 in icm1s of any one of clauses [at to {1} of c'-éx;)1d.1'1ati()11 Lmder s@(r.1.1'()n E ISJA 0I"1:he Act... To in other words, \.'Vht'1111€'.l' this SLII'plLES a111()L1m':_--**:vas" 5' an1()m1t', which could have been a(1dcr(l,..,ba(:E{ ;i.f)'"t',i'1éfv»E)t50k p1*('):fit"s of the assessec for the 131.:1*})()s(5=.0f'1'd€€e:'ﬁ1iﬁi1jg demned irmome of 1'.h£-: e1ssc3sS'e§f. "--..fbr the year Co11side1'at,i<)11 in terrns of the p11*c)visi'0'n3,6? .A'_5::'L:'i.i011 I 15JA of the Act.

97. It is in *;§X21n1i1'121t.i(i)I1, Sri. Sl'121nka_r, has put in best:

ef'f(>1't:s to ec1 t.1_gt2i!;' e of acCou1'1't:ancy, bowl: }»:ee:pi;'1gg; 2e.1'1%j '}):-"¢"é1(*.c1'cJ be->{'()re us 2;: Vw-:2.1ll[I"1 of r1;1«e1é::*::1'ie1l {_'>7uc1:ﬁ1i11g1r on t'}'1't;';-.';13-{'--*: pc?(':1.s.

98. %-W65.li212?§'--A.bé:en.'Via 1<er1 ex-'c;:n to fc_)1'c:ign _jL.1(iggments for 1';_xiflviiC1€I'SI.£1Hdi.1153,' to w1'1z'1t exe:(_:tI}_\;' (.ra.n ('t01'1s't'it'ut.e. book "';'«:~ltj'ft';'f_i1V1"'.r_}fT'a m._:f1pa1'1y. parlzictularly, in the (:<)r1t.e3Xt of the "._*asécss<:VC=-héwing iI1di(:a.t.(-;>c1 in iis books of ac:ct0u.t'1't,s and the assessing officer for arriving ' T4'at.t'h'eV.booltl profitslof the assessee for the year in question 115JA of the Act was fully justified it the questions on this aspect should be Tfansvvcred in favour of the revenue. 110 that the net profit for the year was a sum Rs.4,20,34,196/-- etc., and there also being aw admission that there was surplus 43,16,50,81l.69/~ 'which is 1'}.O1Il'll1':l-gW'Vl31,1lZ"

attributable to the disposal of the as a going concern for a slump revelation in the annual reportAVllandt_:':also_A virtually': an admission in Annex-ure-B by the assessee in terms of the sheet of computation of

- "surplus-i of R.s.43',~16;-5(},8~11.69/- and on disposal Of4_SQffdff_f1lC. ariaertaking as a going concerri for c"1".<3_l'z,z,rz/ii') price has been treated as capital receipt aridtriotptaken into account in the l ' 'a.boveVcompz1z,tation.'' llll H 111

103. The emphatic submission of Sri. Seshachalagep learned senior standing counsel appearing for the r'e'v'erI:.1..i_e1i' _.__ if is that the re-computation of the book profits:f.of"A--1.th.e assessee for the purpose of section },_l5JA1ActV~ the assessing officer is not by wfaypof alteration of the book proﬁts of computed or determined in terms of parts -- II and Ill of schedule--VI to the only by the working of uarnount of book proﬁt even in terms of these provisions.

104. While Sri. Shavnkar, ilearned counsel for the assessee islyery Vrigfhti»-.that..pon themstrength of the authority placed beforenuszVonV"bei1al.f.:of the assessee, there cannot be two 1"IA"opi.nions"'«.__that' book profits as ascertained by the "'"'a'sses'seep and 1 as certiﬁed by its auditors statutory or had been accepted by the authorities under "Cornpanies Act, 1956 cannot be in any way found 48/, 114 appointed by the buyer which can form a very firm basis for arriving at the capital gain in respect of such assets the tribunal could not have allowed the appeal of".

assessee purporting to follow the ratio of the decision' the Supreme Court.

106. if the examination is not in the of provisions of section l15JA[2] ofthe-r,ActV.w<hiche."as under, "115-JA. Deemed to certain {2} Every a.ssessee,"being' a company, shall, for the ptLrp0fSes'--~of~this section prepare its "'p_rQfit "and " .loss account for the _ -Ifelevant previous." year in accordance with the p-royisions of Parts II and III of p 'Schedule VI to the Companies Act, 1956 * l t V as V()')f"'.l1_'.'V9"|.':Jf'_6.}-. . "'Vl'Provid_ed that while preparing proﬁt and loss . account, the depreciation shall be calculated on the same method and .. _ rates which have been adopted for V V "-,calculating the depreciation for the V' purpose of preparing the proﬁt and loss account laid before the company at its annual general meeting in accordance 115 with the provisions of Section 210 of the Companies Act, 1956 (1 of 1956}:

Provided further that where a company"-..jg.___i' T _._ . has adopted or adopts the ﬁnancial year it under the Companies Act, 1956 .

1956), which is different" »-from the-.'4 previous year under the Act, the frrI£3tl'iogii'--- ' V and rates for calculation oj'.Vdepreciation~ , «. " 3 shall correspond to the rriethod and rates which have been adoptedfor calculating';

the depreciation for suc'h_ji.'1anciai year 3 or part of such...fir1a:'iCiaii:'--_qear falling"

within the relevant previous "g.e*ar;~r _ Explanation -- For-.the purposes""of this section, "book pitoﬁt" _r'1e'ans'_j_the net profit as shown ;in_.the'«_orofit and toss" account for the relevaiit year prepared under*V..subésectEor'1 (2). increased by --

la} -. tax paid or ' '-_payabl€f;V. '*~._t;ind=' the provision '*-- > therefor: ' or . A * the"ar_nounts carried to any reserves by whatever name called;

A. (cl A ttievlaniount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities; or did} the amount by way of provision forﬁ losses of subsidiary companies; or

(iii) 117 credited to the profit and loss account; or the amount of loss brought forward or unabsorbed' whichever is less as per books account.

Explanation m For the»ApiirposesVVl4of;ié this clause --

depreciation, _

(a) the loss shall l'n.ot* include. 1 depreciation; " ' "

{b} the Pfouisioncilnof clause shall,n'ot alpplyv _th_e' 'amount of loss brought foru2dr*d or unabsorbed ' ._deprecia't-ion, is by profits' derived by an «_ 'indus'trial,g 'u_nd.er'taking from the '-busi.nes[s._ generation or ',__generatio.n" , and distribution of po_wer;For the ofprofits derived by an 'industrial undertaking located in "an._industrially backward State or A --'--"gjdi}-strict as referred to in submsection ' {4} and sub-section {5} of Section 80-18, for the assessment years such industrial undertaking is eligible to claim a deduction of hundred per cent of the proﬁts and gains under subsection {4} or sub- section {5} of Section 80-IB; or {vi}

(vii) =7Ind'L:sfria.l . 4'"f{E'orr:;i2anies"

118

the amount of profits derived by an industrial undertaking from the business of developing.

maintaining and operating an_;j""-. infrastructure facility as defined "

defined in the Explanation tQ..«3ul:i}~.. section {4} of Section""80-L4,' a_nd'~ V subject to fulfilling the :con?diii.ons"-

laid down in that sub»secii_on: or'_--,_i . 2 V' the amount of"v--.i.'1:i§}=Qfitsv' 'Qf industrial company -._for" «-the assess rnentzyear lcomrnertcing from the assess.m'3nt'._ y«::ar"4_'eleUant to the previous year 'in' whicl'ri.ihe'_;said company beco_rrie'v_ sick indusutffiial l;_cornpany"* [under sub sectitjn {1}.QfSect13onj1 7 Qflthe Sick _ S . {Special Pr0t'ELE;iOn3) 'ACE "l__9_85f (1 Of 1986) " -and ei};drng~_j;vith gme assessment _ .year_.duringV.'u1hich the entire net _ ' ._worth'«.'of such' grornpany becomes =.,equa'i= A' ' "accurrii:.lai:ed' 'tosses; or "' to. .or exceeds the "Explanation - For the purposes of 'this._clause, "net worth" shall have "th"e.,meaning assigned to it in A-«clause (gaj of subsection (1) of 'Section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986).

the amount of profits eligible for deduction under Section 80~HHC, computed under clause (a), (b) or (c) of subsection (3) or sub--section (3- 119 A}, as the case may be, of that section, and subject to the conditions specyied in subsections (4) and (4-A) of that section;

{ix} deduction under Section 80--HI:-$13'; V computed under sub-section _{.3).,of_ that section." -- ' Various authorities referred to and relied the amount of proﬁts eligible Shankar, learned counsel for the assessee no ' signiﬁcance.

107. Even in the matter gains as a result {of and through the mechanism Act -- the computation provision,:theA to ascertain what possible invllfayour of the assessee as a result of the allowing such other deductions as "-cost_v'of:improvement etc., as factually found to l H " 'l9£a'VeL"been irieurred etc.,. Atrainsaction of the slump sale which is patronized many corporate assessees and very popular is only for 120 the reason that if the transaction is to be characterized a slump sale it can result in avoiding charge section 45 of the Act by demonstrating workability of the computation provisi.on,"nannt.ely,lsetttioiiv 48 of the Act in the facts and circunistances of;_ta"give1'il"'~ case. While it is no doubt that the"-eXercise'or1'th_e part of the assessee is to avoid the' ~l.iabilityljalvpresultloficapital gains and the assessee mav .Al.po_s'sibility by claiming that it wori{_"th.g:l,Tprovisions of section 48 of the-igapital gain, when the provisionlsull be from such background,Vlll'but. of as to whether the provision itworkahie or otherwise or if it is possible to ascertain the gains even otherwise aiso. ()9. presejnt.g1'ease, we find that the assessee on its "o_w'n'.computation has made a clear admission even in note appended to the return that the ltfransaction of slump sale has resulted in a surplus of Rs f4:43',_l4_l;'5,59,811.69/--. It is also the undisputed position that 121 f.1"l(:' ai1mL1r'1I 112315 beer] ('&i1'1'it?d to the czipiial 1'eseWe dC(?()L1l'l1'.. In the wake of S'i,1.('.h aidriiiite-.d pOSi.'fli()1'], it is very {?lt.'.E'1i' that tlw )1'(,)ViSiC)I1S of s:»'v(..*i:i<i)1'i1 48 of 1:110 Act can be i V .

worked by ac.:c.%epti1i1g 1.110 assessee's own version t'hE1'i.->J[i1f.§'.,." surplus is the gai1'1 to the aissessee as 21 I'(?E5L1i"{._"Of"':..1';i:C'.'N i;i'ansact1'()i1 of slump sale of the c%11t':ii*c:'sE5It' C1]jil'«l'k as :15' going concern and the total i11(*.om€t__ the computed on such premise.

I 10. However. ?Vei§€:'eri.ai11mer1t. of c:;ipit.a} §f,dil'1 pl'€H']iSE' {hat the ('lie-3 i.rar1s;i'<'.+1" of botitling unit: as a goiifiiga" " res1.11iied in 2-1 surplus l'Li?_-':11.i2CE1'{'i()I'}.;~':§)f R9'. 43.,'IE:I5'_9'_.AE?3l 1.69 and for such arrival of i;l1€-1usLi.i*p1.i;15-,_:ii1iQiZi"n_i,, the assessee would have qL1ii:e .77i,_1i1ai.ui"ai'Iy "g§iyei'i 'a.:§fd.§1(!i;i()£'l to the Cost of the a(:quisit,ior'1 of v"'\5"'cI'I'I'C;3V1,155 ('01'11ptIiii1m11's, whic}'1 1,lififI1E1I.Cly c()1'1s1:iti.11';ed the {'c?0.sI{(>i'Vt,Vl91"c;:,bottling plam: and 1'1'1e1t. amount. havir1g_; been .i"e_c_i'i.i'CeCi; from the sale price of the b01ii,ling plant: as a i.<:.>. from out of 55.44.90.899/+ and iherefore t'vV_'ji1':;E;if'it:ci =-.i__11 _E~a.t\a_f}' :§11'1(1 on 1'a(t.t:-3, S1,1.(Th clai_n1 can be ""ei'}'t:;=«:r*t:za1jmed emd a furtiher deduction aliowed from out of '-gttzhe' a§r;.1O'u..!'1.t of Rs. 43, 16,539.81 3 .69 to arive at the actuai If on the other f'1a1'1(i, the assessi_r1g officer is not 122 the diff(¥}'('1'1(.?t? of 43,16.:'39.811.69 (.3C)I'1S1ZiT,.L.1.T,E'.S Capital ge1i11 even in tertns of the provision of Secrtiion the ACE. if the E-1SS(i'SS('.C s.aI"1()t.1id 0121111': that any cost of a(tquis1't:ion, in 1'e:_~3pe('tt. of the bottlirlg L1r1it.._ wi1icl1 was e;5c:)ict, time of the (:0mp1,1t.ati01'1 of anlotmt. in fact; 1'01'rI1iI1g_;,_part.A"()i;:n_It7:e"*-gt(étuaé1I"(:0éJt of acquisit:i01'1 in respect of 211%/V% bottling unit, we reserve lib§<3rt§ttf 't.f;x tbrth such a (élairn before now, after the relnatld 21.11(jt"'fd with supportiing n1at,eriai a1'1cV't7.p:roc>Vf offieer. If the a.ssessi11g o.E"ficer S'1'3Qi:11c1..'-t'i11"d that. any surrh Claim now put ft9Vi'th"'hy t;!.1e 2l1"E?S€SfASC?€' f'c)V1*"i'§l21i111i:1g,{ further deduction from out '(>11 that :;--1r.11c):.:r1t of 43, 1659.81 1.69 is :77i,_pvrc)v1si0IiS'=of l'l5JA of the AC1: to arrive at the 71j1.aX2;il3le l>ll'(".'()2"I""l:A('3 rial' the in i:<;=.1m:i-3 of Ellie provisions _ £§"g=(§:1:l:oi'i._4_1 IVSJA and to detxériliiiie the precise lax liability 123 (:(mvi11('te(1 of the §;§€'l"}l.1iIlC?{]E?SS 0ftl'1e claim for 111:»: liirthgfr cic*ciu(*i.i0n on Ehc E'c?1'1_abili1y of S1,1('h ('laim 1.0 be and as 21 cledi.1(%t.io11 f'(')r'i1'1i11_g_§ part of €119 cost: of of the 215391: for c0111p1,11_21t'i()11 Lmder Sc:(?i.io1'1 or (':'VCl'] if it is fo1.11'1cl that the Claim by the Eissessee by adequate 111§1"l.:3i;i_:_1l:7;h'éi'h§, not placed by tl'1r: 2'xssess§:€...hel'Qi*e" officer. then the ass<3s.si1"1g officer slllitlfglclll premise that the surplus to the 1:1-a11sac::i:ic>11 plziiit as a g'0ir1g c(m(:er1"1 E-3\/'61:} M-ii-1,, V'u--':_1"'m:é;::,. of 'SEE(Il4I()'{l""4«8'V: of lihe Act and 1:0 [)1"(.)('t€t"d to *_c011_ipLV1i,'<;'rg .i:_li1"€, 0i.:(c5§"i':41ll-- taxable incorne of the assessee andi£.l1éreaﬁe1*'"1:0,éi*sCC1*t2-1111 as to whe1;he'1' the taxable? il]('?_()1"l'l(*.',"\')fV lilac "elssbssee computed on such p_i'é'xni_se: s§;ill .f0L1ndV' less tharl 30% of 1;.he book p1'di'lI:s in whicéh eVe1"1i,, to apply the which '-g)!"-.V'1.hes%;€ . !'§:x?() possibilities are att,mc:i:ed to a '2.§)E}1i'3'VI'(TL,1iE1I"..({}}'S("V ciepencie11t on tlie FaC1:.s and { 'cu'1f(:1m1simixpes of H18 (."<1-St". 124 <')'I"1"lT1c 21-sscssc-?s' for tl"1r:* e1sse'ss1'I1c31'1t'. y(=>ar in. q1.1e5st.i()11. 'I'h_.i_§3 di1'ect.i0n hokis good 211 all plzmes whmc xve iuwe l'£3f€I'g~1'1('.€ to the capitraf gem-1 of the e1s3css.-we surphls em10unt of Rs 43, 18,539.81 l..E'nv9'._""<>'--.«.*c:A11 by the assessee in its books of E1()(',()L.1A:I1Vi é1rAi.C1 a1I:3gi in return as had been filed by flu'? zlsssgf I11. VVhen such is the ;)f the aL1t:h<)1*it',y of tlne j1.1d.gvn1e:1]:t" Court in ARTEX'.-3 c;:e1se ijpi'1'!',§f'(?iVVv"rre:nsaction of a slump V in Cases where i11di\ridL1a1 e{&:%':_Sc-:fj.s '(lie e11i;irc unit' sold as a slump sale. ar"(-:,_i(ie1"3ififi;ib]c%ﬂi-=wit:I1 c:e1'1:air11'y or on 2:. firm 132131:-3. tl1§r.ige1ii~1s a1.t:i'ibu1_rabl.e: to the individuaf assms can alS"0_ be"a.scermir1§%t1v__ar1d that ga1'r1 brought to tax. As to 126

113. We find in the present set of facts and Circumstances, the entire exercise would have become relevant only if the assessing officer should have founhdigg that on a proper computation of the total incorne""of..'t~h§3V':

assessee, i.e., by accepting the surplus as indieateci..in--.the note to the return filed by the assessee it gain and on such premise the total incorne shovuidvshave been ascertained and if it was in found' that it} was less than 30% of the amoutitﬂatsp applying the provisions of section :1"i"-i3J§--'i then alone further queistio-us But, unfortunately, the assessing on the premise the._%:pj¢1;ai1sacti'o'12.V:vvas: a slump sale, the surplus entire transaction was not xascertarinabley attributable to a few individual lﬂapssetps ..th.e.'4premise of the report of the Valuer buyer should be taken as the basis for i' it-Vieotripuiiation of gains for transfer of these assets which is Lexercise though cannot be totally characterized as an 9%/to dete1'm'i--1:1..ing t,l'ie"."i;21X::Vliability of the aissessee, pari".icularly,_ Von the baslisj of t.l"1e surplus as i1'1dic:at.ecl in the note to the «jI'~f'.t:l1I':'I'} Aiiled by the assessor: to be the capital ,r_'ga.iri for the 4"1'xt'.*.'.l€V.E1l'a]".'.'V aocot1.111:ing period. mid to find out as to whetlier 127 e1'ro1'1eo11s or an illeg'a1l (;'.XC1'(TiS{' l:)1.1t. 1'l€V('.?I'fl1(:',l&'SS the qL.1esi:ioi'1"oei11g to wl1eil'1ei' ii was iwctessary at all if i',.l--to capital gdi1'1 is Elie amount: of su1*plus eisscrssee i1.self'a1'1cl as a result, of the t.1*2msfer as at goin;__g coriccrn arid if the toigilmmiiioo_r1'i¢ premise. if should have fallmi short oi profii"s in tit-::1'1i'is of the pr()vis'.ic)i'1ts Act, t.l1en alone the 1'Cfqt.ll17t{I11_§?I}.I"7(§.l; I the Act arising, we are..oiTAAtl't_e vi.e\>v_,1.h.at-.eXé1mVihii);g the various cc)m.e11i.ior1s put"l'ort;'ri""o3i;; ¢'1_v}_io_'21ssessee in the c:ont:ex.t of ~'t'"ii'e-..;j:fi1'1oi:fgr:)leS"not etc§_oo'iir1i.a11(:y and book keeping, to €l'S(?€f1)Eli.l1VE}§5'"al:(.5~\'lll'l§?lf}.1€?1" there waS a. debit to tllc profit anal loss-S '2.1(xjc;.t,1ii.i. f.':'i' not. an €.X€1'C§S€ wholly 1it-i"i'1e(:ess:§i'ry. .._b1._I_t. inHth:>~"<:ir'(:tImstances the matter is l'(3(V:1.1_.l'v1'flr;'zV{.Vi"'1[.~.CV) b_v£r§'~1*'t-=;«,r..I1ﬂ'a1'_1clc-zci to the officer for re-

128

such total income is still short of 30% of the book proﬁts of the assessee and then alone to apply the provisionstof section IIESJA of the Act would have arisen.

114. in such circumstances, We are the if matter Warrants remand to the aSsess§'i1gf"

compute a fresh the total income terms of the provisions of section the situation warrants the -the taxable income as provided'_tinder:"secLion.:' Act and the of theVV_ttssessee on the premise thst the as indicated in the note to the returnﬁaieidvv by ssssefssee in itself constituted capital and thait.:capita1 gain being part of the total ir1'come;--» _Varriv=eci._dat__ the total income afresh and then compduther»'theV'd--taXA't:=hIi'sbi1ity in terms of the provisions of section the Act and to decide the cases on such 7 'pre~ﬁ1i.se.d " 2, 130 negative, in favour of the revenue and against the assessee.

Whether the Tribunal was correct in holding that the transfer of soft drink unit of the assessee was a slum (sic) sale, when the individual valuation of the assets has been by the expert valuer before arriving at the total consideration for transfer of the unit? ' ._ dbeingh . __siurnp "does sale _ '

-difference to. the tax '' s. _ having_ * » .Vregard to our V -opini'on that ._transaction 4_nat'ure'""of a slump sale can attract tax liability, ' i' «. "fort; statistical ""thi's 'answered While the questi'on"t Whether a.._sale=._is_ a" "

slurnp sale or" oth ei'w_ise" _ is essentially' 4a' question i f of ''«fact; " in the --. present" 2 case: the utrantsactlionl not _ n-1ake" much iia'biiity'=of the assessee even a in the purpose question is in the affirmative, as we are not inclined to disturb the ﬁnding recorded by the tribunal for the reason indicated hereinhefore.

was correct in. .holding that there was no default u/ s. 208 of the in not paying the advance on the ground that entire ' a tr'an.sae:ion of sale was a slum ._(jsic}V sale and no capital gains No, not correct, for the reason that the operation of the provisions of section 208 of the act is not dependent on a sale transaction being a slump sale or otherwise . .arve__tichargeable, when the levy 131 of Interest 1.1/8. 234 B of the Act was mandatory?

._ , 'eVo1np11ance/'non-

V. ...ar;'ih_eI'ence to V . _the'' other the act; 1 and even when _..__the transaction 'is characterized slump sale, thereg__(_:'aé1___ be ascertainabie ._gai'ns'": ' arising fromthe Vsaie_ of "

the wasset I resuiting V ._ in "

not only the f ..ot?,r_i'e1f""v.

but 7.__""also-

consequ--ence;s4 A due to V" ' ""11or1--

rnzaaidatory p1'OVlSl0r1S of In rm No. 325 of 326% Answer 1%). --

a Whether the '£ribunat."isjiust§,ﬁ1ed in holding that. the. trnnsciotfion of slump sale"4.is"tcoaV1ble when the prooisions of'Sectir)n 50B of '''the Aefwos introducedfrom I-

_4--2ooo anctchuss not applicable to the_ "¢1ss'ess.rhertt; year 1999-- 2ooo?_.i*' -"* Tribunal is justified in holding that the transaction of slump sale is taxable even prior to the introduction of Section 50B of the Act, introduced w.e.f. 1-4* 2000, in the tight of our discussion above and therefore the question is answered in the affirmative, in favour of the revenue and against the assessee.

132 Whether the tribunal, on facts of the case, is correct in law, in holding that the capital gain on the transfer of entire undertaking as a whole has to be computed?

g assessing ofﬁeer; as igve"

are r-----o.fﬁCe'r., for-.. such puV"rp_ose;, The question answered in the xafﬁrinative----, "in favour of The tribunal is correct in holding that the capital gain on ._ the transfer of entire undertaking as axwhol'eV has to be compute_d.'annjdv' in the iight' of * further ....C1ariﬁ-eation * ._ n1ade.__in this 'ju.?igrnent, ' the cornpi:_ta*tion " to T j be} Lr__nadeb*- by .

V V_ "remandirigy the 'matter to the ' assessing .4th.e_--revenue and against the "as'se'ssee.

Whether " i"ti':eu: 'E; -- "sale amount ivreceiuecio on " «the._facts and cir'curnstance.' ~ . . of the appellant case "eo:*istit_u'te capital receipt? -

'}'1'n'swered in the f affirmative in favour of the revenue and against the assessee.

' _circums.tanee_of._the case, is the and tribunal, 'justyﬁed. in law, in hoidtng gthat..vVreeorfq9utation by the 'as'sessirigj_ officer for the purpose of' determining book proﬁt under Section 115JB of Act, in accordance with The question is answered in the affirmative, in favour of the revenue and against the assessee, holding that it is for the assessing officer to compute the book of profit for the purpose of _iaiLu?

133

Section 115JA of the Act, even after the preparation of the proﬁt and loss account. of the assessee for S proxzisions of 'pa_rt.~II~ and Iiijof S'ch;e'd_ule----V1'- ofpthe Compaiiies it ' . Act, 1.9 -5.67 .:

and: by exanriiniiig the V. "~applic'a.b1Iity' ' each "clause ' _ V' S V. _. ..explanation' -.._to,.' sub "in the se'ct_io,r1~~.. (2) of Section the Act.

Whether the on ?_tl'ie sale of the whole requires to be credﬁed to"

the pro rt"andV"ioss*§:.;1ccount in"

accordance _ I1)it?t:;)(1_rt+Ii III _ of Schedu_le'--'/I ~. ~ . of , _. V» the C()TTipC1ni€S=ACt? ' " ' 4_'TheV."'question as posed _is._:iot apt. While in the "preparation of profit and loss account as per the main part of sub-

section (2] of Section 115JA of the Act, it has to be only in terms of the provisions of part--II and III of Scheduie--VI of the Companies Act, 1956, the computation of book profits for the purpose of this Section, of which 30% constitutes deemed income of the assessee for the reievant period, relevant previous " 'yfe-ar;~'. ' in accordance-._eVWiti1 the-. _ is only by operating the V, 134 I explanatlon to _sub--

section (2) of Sechtion 115JA of the Act.-gt Whether the tribunal is justified in law in holding that the decision of the Supreme Court in case of Apollo Tyres Ltd VS CIT in 255 ITR 273%.?"-

t eat not applicable to appellant's case?

V x V"'4Si'1:3reme Court being in A A " context of Section .1"l5J S "cannot be sand to be an Shfas i1--1.c1ica~te'd above and .al.so_ for the reason that Cwesllthtde V 'r.1jR_ 2731f' is jg not S "applicable The tribun.a£..is"justif.edS' "

in'""holdtr;.g V the decisions. or the sup:e1nérl[.:

Court in case of Apollo's {255 S ' ' to" the apgie-Hjancs case, both .th._e" decislon of the of the Act, it authority or declaration of law, even in respect of provisions of Section 115JA of the Act. The quest1on 1s answered In the afﬁrmative in favour of the revenue and against the assesee.

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Karnataka High Court