Commissioner Of Income Tax, Gujarat vs Artex Manufacturing Company on 8 July, 1997
17 to 27 of the paper book reveals that
the assessee did not enter into this transaction and what is sold is the property as
per Schedule situated at Sy. No. 622, 9 hectares, 51 ares and 25 sq. m. in Kollam
District, Kollam Taluk, Kundara Sub-District, Perinad village. It is also clear that
the Liquidator will be responsible for acquiring of liabilities. Thus, it was not a
slump sale, rather only the land and building were sold out and the liabilities
remained with the assessee. As per the judgment of the Supreme Court in the
case of CIT vs. Artex Manufacturing Co. (227 ITR 260), the sale of business as a
running concern involving both the assets and the liabilities, shall be treated as
slump sale. Being so, there was no slump sale in this case, Hence, from the
14 I.T.A. Nos.195&218/Coch/2014
impugned sale deed dated 15th March, 2005 and aforesaid agreement, the
consideration attributable to land and structures therein can easily be found out
and section 50(2) is to be applied. Thus, it is only land which is not a depreciable
asset and the consideration attributable to land will give rise to long term capital
gains u/s. 45 of the I.T. Act. The consideration attributable to the depreciable
asset will give rise to deemed capital gains in terms of sections 50 and 50A of the
I.T. Act. The Assessing officer is required to recompute the capital gain of this
transaction.