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from the customer and paid to the assessee. Reason being, the gross revenues for the entire billing cycle would have been declared by the customer, M/s Tamil Nadu Government Electricity Generation and Distribution Company ('TANGEDCO') only at the end of the billing cycle, and therefore it was agreed between the parties that, the revenues pertaining to the period up to the date of transfer would be collected and paid by the buyer to the seller, as understandably such unbilled revenues belong to the assessee-seller who is the legal owner of the business till the date of transfer. The assessee is therefore noted to have explained the reason for incorporating a deferred consideration component, apart from the lumpsum consideration of Rs.93 crores, as it was not possible for the parties to quantify the unbilled revenues for the interim period between the last billing cycle of TANGEDCO up to the date of the transfer of division. Hence, such a deferred consideration component was suitable provided and agreed between the parties. The assessee showed to the Ld. CIT(A) that, the agreed consideration of Rs. 93 crores was towards the total transfer of business including all movable & immovable assets, employees, payables, receivables and other related liabilities, on a going concern basis and that no separate valuation was carried out for any of these assets individually. The assessee accordingly claimed that, in sum & substance, the windmill division was valued as a one single unit and sold on a going concern basis, and the assets were not sold individually, as ITA Nos.2330 & 2618/Chny/2019 (AY 2015-16) M/s. Ashok Leyland Ltd.

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unbilled revenues which accrued up to the effective date, which would have been accounted by the seller as its income, would be later on paid by the buyer when the entire revenue for that billing cycle is realized from TANGEDCO. Hence, subsequently as and when the buyer received the revenues for the relevant billing cycle from TANGEDCO, it was ascertained that sum of Rs.7,86,53,304/- belonged to the seller being the revenues attributable to the interim period up to the date of transfer, which was accordingly handed over by the buyer to the assessee-seller. The Ld. AR showed that, this deferred consideration did not have any impact on the overall capital gains assessable to tax as the unbilled revenues, for accounting purposes was added to the liabilities as it represented amount due to the assessee towards the undertaking and equivalent value was added to the full value of consideration in terms of Clause 3(ii) of the agreement. As a corollary, the net value of capital gains liable to tax remained unchanged. The Ld.AR thus argued that, the value of the entire undertaking was indeed ascertained on lump sum basis and only because a deferred consideration component was agreed towards the unbilled revenues, which was not ascertainable at that material time, cannot be a valid reason to allege that the assessee had not sold the business undertaking on going concern basis for lump sum value, but had assigned separate values individually for assets, resulting in a violation of Section 2(42C) of the Act. He therefore urged that, the action of the lower ITA Nos.2330 & 2618/Chny/2019 (AY 2015-16) M/s. Ashok Leyland Ltd.

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for which a separate deferred consideration was agreed for in sub-clause

(ii) to Clause (3) of the agreement. The said sub-clause is noted to provide that, the value of 'unbilled revenues' which accrued up to the effective date and shall be payable by the buyer to the seller on realization from TANGEDCO.

9.14 From the facts placed on record, we find that, this deferred consideration component did not have any impact on the overall profitability of the assessee from the sale of undertaking. Instead, the same is noted to have been provided for because of the unique nature of business of the assessee and the parties intended to correctly balance the books of both the parties and ensure accurate accounting of the revenues by them. Admittedly, the assessee was generating electricity in their windmill division which was being inter alia fed into the grid of TANGEDCO on a continuous basis. Unlike other businesses, where the quantity of goods supplied, value of such supplies etc. are pre-determined at the time of sale, in this electricity business, where power is supplied to government undertakings, the customer, TANGEDCO is in charge of the billing cycle who intimates the units procured from the windmills at the end of the billing cycle along with the tariff rate/price at which such revenues was to be billed by the assessee. It is noted that, the agreement involving sale of windmill division was made effective from the date ITA Nos.2330 & 2618/Chny/2019 (AY 2015-16) M/s. Ashok Leyland Ltd.

9.15 The above computation of capital gains is also supported by Form 3CEA issued by Chartered Accountant, which is available at Page 2 of Paper Book-III. It is noticed that the AO has not disputed the above computation, from which we find that, actually the net impact of the deferred consideration on the value of capital gains assessable to tax was NIL. We therefore find merit in the submissions of the Ld. AR that this deferred consideration component was actually meant to ensure correct accounting of the revenues by both the parties and not to assign any separate values to any individual assets. For the reasons as discussed in the foregoing, according to us, this deferred consideration agreed for unbilled revenues cannot be viewed adversely to disregard the 'slump sale'.