Karnataka High Court
M/S Chemical Industries Consulting ... vs The Commissioner Of Income Tax on 29 March, 2010
Bench: K.L.Manjunath, B.V.Nagarathna
S
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IN THE HIGH COURT OF' KARNATAKA AT BANGALORE
DATED THIS THE 29TH DAY OF MARCH, 2010
PRESENT' _
THE HONBLE MR. JUSTICE K.L.MANJUNAf:E
AND A . S- A
THE HON'BLE MRS. JUSDCE>.EfV.NA;GA£§AfD§:EA'_~ 1'
I.T.A. N0.323$./2(§65:' '
BETWEEN:
M/S CHEMICAL INDUST.RIES,*"" -.
CONSULTING BUREAU---._ --_ = "
NO 239, MAHALAKSHMI '1AYOLI*r;
BANGALORE--56{) 086 V ..
.. . APPELLANT
'1' L. TEE COMMISSIONER OF INCOME TAX
A T C'.R.'B'U1xLI3ING, QUEENS ROAD
%.BA1\:GALORE
2. TEE Di?,PU'I"Y COMMISSIONER OF INCOME TAX
CIRCLE 8(1)
D _ CPR. BUILDING QUEENS ROAD
' "BANGALORE
... RESPONDENTS
V {By Sri: M V SESHACHALA. ADV.)
i/«A
-2-
ITA filed u/S.260--A of E.T.ACt, I961 arising out of
order dated 26-07-2005 passed in ITA No.1581/Bang/2004
for the Assessment Year 1999-2000, praying that for the
reasons stated therein, this Hon'ble Court may be pleased to:
i. formulate the substantial questions of law stated therein,
ii. allow this appeal and set aside the order pass_ed_l'b.y7.the
ITAT, Bangalore, in ETA NO.1581/Bang/2004_"dated
26~0'7~2005 and hold that in the case of the__--Appella11t
Assessment Year 1999-2000 on the slum_p__s_al.e 'oi"~carbon__
dioxide business there arises no capital gain corriputahle in
accordance with the provisions of the '1_9't3..i.___to._}:)e
brought to tax. 0' A' " 0 "
This ITA coming dayfl
Nagarathna J., delivered the following:
0
:"i'his__lthe assessee by challenging the
order dated 2.s.'7..2ooS-passed in lTA.No.1581/Bang/2004
raistngthe folloWing'_S.ubstantia1 question of law:
.W'ne'ther the slump sale of a business undertaking,
'capitallgain is computable in accordance with the provisions
of the they stood prior to the amendments introduced
'1:;;,,~.13'1nleL:1ee Act, 1999 with effect from 1.4.2000.
0' V' The facts leading to the filing of this appeal are that
the appellant-assessee which is assessed in the status of a
firm filed its return of income for the assessment year 1999-
I
K"
2000 and had claimed that the entire business had____heen
sold as a going concern and therefore, no tax on the'he'ad'*o_f
capital gain could be levied in respect of ~
consideration received by the assessee. --'Th'e~..'_Asses'singV
Officer, however did not accept the'».._sai:dcontention aga:.nsi:_:
which the appellant assessee "filed an lxappeal before ithe
Commissioner of Income Tax vvho the
order of the Assessing the rnatter was
taken up before' the appiellatlefl The tribunal
reversed the authorities and
had held that was received at
the said for transferring the
businessand wise sale by its order dated
26.7.2005. ll?I~ov_ve'.Ier'-- regarding computation of capital gains
the iremandectthe matter to the assessing officer to
l.ia.bility to capital gain on the basis that it was a
case slunip'i_saie. This portion of the order is challenged by
'the assessee in this appeal. "me said order was also
2' hchallengged by the revenue in i'1'A.No.12./2006 before this
@.'-'court and by order dated 8.3.2010, this court answered the
lflpsulbstantial question of law raised in the said appeal against
the revenue and held that the tribunal was justified in
reversing the order passed by the lower authorities and
.
holding that the sale in question was a slump sale within the meaning of the Income Tax Act and that the payinerzt on the head of capital gains was rightly rejected_ _ Q --- 5 »
3. During the course of the argii;:nents.,:vit"is.'subniiited the learned counsel for the appellant as_sesseeat1*iat.in View of ; the said order dated 8.3.2010 thesubstantiaiquestionof law raised in this case revenue and in favour of the assessee decision of the Apex Court iri"tiie_:case=A._of V/s. CIT-I, New Delhi (252 it-lhas been held that where the but it is a sale of the business as a or a slump sale, it would not be possib_1e to a"C:ornpu1;--e caoital gain and therefore, the amount V' . receiveici under the"'sa'id sale cannot be taxable under Section oi". ti1e:iI.ric.om.e Tax Act. The decision of the Apex Court arose frornieiiiie decision of the Delhi High Court in the case of PNB ~~iFirz-Liricre Ltd., which has been referred to by the " « " Assessing Officer.
4. In the decision of the Apex Court since the relief has been granted to the assessee by holding that in the case of slump sale the computation of the capital gains is not rm