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"1. That the Ld. CIT(A), C-1, Kol is erred in holding that holding negative net worth in computation of capital gain is a disputed issue and thereby deleting addition Rs.716.809 lakhs.
2. That sec. 50B(2) clearly directs to hold net worth of the asset deemed to be cost of acquisition and no regard shall be given to the provision of sec. 48."

4. Brief facts are that the assessee company filed its return of income for the relevant assessment year 2003-04 on 27.11.2003. Assessment was framed u/s. 143(3) of the Act vide order dated 28.03.2005. Subsequently, Assessing Officer issued notice u/s. 154 of the Act to rectify following two mistakes:

5. We have heard rival contentions and gone through facts and circumstances of the case. We find that the AO has accepted the computation of LTCG under the head Capital Gains while framing assessment u/s. 143(3) of the Act but the same was recomputed while acting u/s. 154 of the Act pointing out that there is mistake apparent from record. Whether adjustments carried out by AO are beyond the scope and intent of sec. 154 of the Act or not? The AO interpreting the provisions of section 50B of the Act enhanced a LTCG on transfer of sugar undertaking on slump sale basis. We find that as per section 50B of the Act, capital gains is to be arrived at after deducting from sales consideration the net worth of an undertaking, which is subject matter of slump sale. As per section 50B of the Act, net worth is deemed to be the cost of acquisition of undertaking for the purposes of sections 48 and 49 of the Act. The net worth for the purpose of section 50B of the Act is equal to the excess value of assets over the book value of liabilities relatable to the undertaking. In the present case, the AO while framing assessment u/s. 143(3) of the Act computed and gone through the book value of liabilities of sugar undertaking, which was at Rs.130,60,86,238/- whereas the value of assets was at Rs.123,44,06,601/-. It means that the book value of liabilities exceeded the value of assets by Rs.7,16,79,637/-. The AO formed an opinion and accepted this fact during the assessment proceedings u/s. 143(3) of the Act. Subsequently, the AO changed his opinion and formed an opinion that the excess of liabilities over the assets represented the additional cost for transfer of undertaking and excess of liabilities is in the nature of sale consideration of Rs. 30 cr. and thereby AO determined and assessed Long Term Capital Gain at Rs.37,16,80,000/-. As referred by Ld. Counsel for the assessee the decision of ITAT Mumbai Bench in the case of Zuari Industries Ltd. Vs. ACIT (2008) 298 ITR 97 (AT) wherein it is held that the assessee a manufacturer of cement sold its cement division for lump sum consideration and the value of liabilities exceeded the value of assets resulting in negative net worth and it was held that when net worth was negative computation provisions governing assessment of capital gains could not apply and, therefore, no capital gain was chargeable to tax. The Tribunal finally held that when the value of assets computed in the manner prescribed in section 50B of the Act was less than the liabilities, the net worth of the Cement Division would be taken at nil and the 4 ITA 2040 & 2012/K/2009 M/s. J. K. Tyre & Industries Ltd. A.Y. 03-04 capital gain would be assessed equal to the sale consideration received by assessee. Identical view was taken by Delhi Bench of ITAT in the case of Paperbase Co. Ltd. Vs. ACIT 19 SOT

163. It is to be noted that as per the ratio laid down by ITAT Mumbai Bench in the case of Zuari Industries Ltd. (supra) and ITAT Delhi Bench in the case of Paperbase Co. Ltd. (supra), capital gain assessable to tax was equal to the sale consideration received for transfer of undertaking where the net worth as per section 50B of the Act was negative. As argued by Ld. Counsel for the assessee that the facts of assessee's case are pari materia with the facts of the above referred two cases. We find that the facts narrated in the order of the lower authorities and as argued by both the sides before us are that the value of assets of the Sugar Division is less than the value liabilities, the net worth was negative which was required to be taken at nil. We find that the interpretation placed by AO in section 50B of the Act is highly debatable. It cannot be said with certainty that a plan reading of section 50B of the Act reveals that the net worth of the undertaking cannot be considered to be the cost of acquisition for the purpose of sections 48 and 49 of the Act, which is required to be computed in accordance with explanations (1) and (2) of Section 50B of the Act. It means that the issue as regards to the computation of capital gain vis-à-vis value of liabilities and value of assets of that also resulting in negative net worth is a highly debatable issue and the CIT(A) has rightly held so. The enhancement of capital gains income was based upon change of opinion on the part of the A.O. which was beyond the purview of Sec. 154 of the Act which permits rectification of mistake which is apparent from record. Various judicial authorities have repeatedly held that a "mistake" which can be established by a long drawn process of reasoning or where on an issue conceivably more than 2 views are possible, it cannot be said that the mistake is apparent from record within the meaning of section 154 of the Act. This view finds support in the decision of the Supreme Court in the case of Volkart Bros. Vs. ITO (1971) 82 ITR 50. In the present case the view canvassed by the assessee and accepted in the regular assessment was supported by 2 decisions of the ITAT. In the circumstances, the AO could not by invoking Sec. 154, enhance the capital gains from Rs.30 Crores to Rs.37,16,80,000/-. We confirm the order of CIT(A) and this issue of revenue's appeal is dismissed.