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2013 (5) TMI 719 - AT - Income TaxSlump sale - CIT (A) valued the Land & Building as per section 50C & taken the FMV of Rs. 1, 45, 03, 819/- and for movable assets the sales consideration is ARBITRORILY derived as Rs. 43, 13, 925/- - Held that - There is no dispute on the facts and figures that the sale consideration of the movable and immovable assets of the restaurant is Rs. 1.35 Crs. The answer is negative considering the retention of certain assets undisputedly. In such circumstances the finding of the CIT(A) that it is not the case of a slump sale confirmed - dismiss the AO s manner of invoking the provisions of section 50B relating to the slump sale. In the result the capital gains have to be computed only in accordance with the provisions of section 50. It is also a fact that the CIT (A) should have granted an opportunity to the AO while invoking the different provisions for the first time deviating entirely from the manner of assessment done by the AO. It is also a fact that there is no dispute about the applicability of provisions of section 50C to the depreciable assets referred to in section 50 of the Act. Of course assessee made a concession that for want of finality of the litigation he shall not make an issue regarding the adoption of the FMV of the land and building. Considering the above there is need for re-computation of the capital gains in accordance with the provisions of section 50 of the Act - appeal filed by the assessee is allowed for statistical purposes.
Issues:
1. Calculation of short term capital gain based on the division of actual sales consideration. 2. Application of section 50C for determining capital gain on land and building. 3. Request for reference to valuation officer not considered. 4. Dismissal of appeal by CIT (A) based on capital gains computation. Issue 1: Calculation of Short Term Capital Gain The appellant contested the CIT (A)'s decision to divide the sale consideration of Rs. 1.35 Cr based on the WDV of movable and immovable assets. The appellant argued that the consideration was received on different grounds and disagreed with the arbitrary division. The appellant also raised concerns about the valuation under section 50C and the failure to refer the matter to a valuation officer. The additional grounds filed requested proper computation of capital gains considering asset-specific WDV. Issue 2: Application of Section 50C The Assessing Officer invoked section 50C for determining short term capital gains on the sale of land and building, resulting in additions to the total income. During the first appellate proceedings, the appellant challenged the application of section 50C to a slump sale under section 50B. The CIT (A) noted discrepancies in the transfer of assets and concluded that it was not a slump sale, dismissing the appeal and enhancing the capital gains computation as per section 50C. Issue 3: Request for Reference to Valuation Officer The appellant's request to refer the valuation of land and building to a valuation officer was not entertained by the authorities. The appellant's counsel argued for a proper allocation of sale consideration among assets and requested a remand of the issues to the Assessing Officer for re-examination. Issue 4: Dismissal of Appeal by CIT (A) The CIT (A) dismissed the appeal after working out capital gains as per section 50 and 50C of the Act. The appellant's counsel raised concerns about the arbitrary division of sale consideration and the failure to consider the request for valuation officer reference. The appellant agreed to section 50C application if the allocation of sale consideration was done properly. In the judgment, the ITAT Mumbai considered the contentions of both parties and reviewed the orders of the Revenue Authorities. The tribunal confirmed that the sale consideration of movable and immovable assets was Rs. 1.35 Crs and determined that it was not a slump sale due to the retention of certain assets. Consequently, the tribunal dismissed the AO's manner of invoking section 50B for slump sale and directed the computation of capital gains in accordance with section 50 of the Act. The tribunal acknowledged the need for re-computation of capital gains and set aside the matter to the AO for fresh adjudication, considering the FMV conceded by the appellant's counsel. Ultimately, the appeal filed by the assessee was allowed for statistical purposes, emphasizing the importance of proper computation and adherence to the provisions of the Income Tax Act.
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