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TMI Blog2010 (10) TMI 673X X X X Extracts X X X X X X X X Extracts X X X X ..... For Respondent :SRI.P.BALAKRISHNAN (E) JUDGMENT Ramachandran Nair, J. The question raised in the connected appeals filed by the Revenue is whether the Income Tax Appellate Tribunal was justified in holding that the sale of the industrial units by the respondent-assessees with the land, building, plant and equipments as going concerns to another company during the previous year cannot be assessed to tax for capital gains as "slump sale" under Section 50B but assessable for capital gain as sale of depreciable assets under Section 50 of the Income Tax Act. The first appeals in the case of the two assessee's were decided by separate Commissioners of Income Tax (Appeals) and they rendered divergent orders, one confirming the assessment of sale of the industrial undertaking as slump sale under Section 50B and in the connected case, the Commissioner (Appeals) cancelled the assessment with direction to the officer to compute liability for capital gains under Section 50 of the Income Tax Act. The Tribunal considered the issue in detail in the case of the assessee covered by I.T.A.1470/2009, allowed the said Appeal and following the said decision allowed the other appeal as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certification in the prescribed form in terms of Section 50B(3) of the Act, in the return filed, the assessee returned the transaction for assessment for capital gains as sale of depreciable items under Section 50 of the Act. Before the Assessing Officer assessee contended that Form 3EA is furnished as a precaution and assessee's contention is that the sale of industrial undertaking should be assessed for capital gains as sale of depreciable assets under Section 50 of the Income Tax Act. The Assessing Officer noticed that the sale is a "slump sale" falling within the definition of Section 2(42C) of the Act and he made the assessment for capital gain as provided under Section 50B of the Income Tax Act. The assessment was made by invoking powers under Section 147 of the Act which was also challenged by the assessee in appeal. In this case, the first appellate authority allowed the appeal on both the grounds that is by cancelling the income escaping assessment as passed without jurisdiction and on merits by holding that the sale of the industrial undertaking is not slump sale but is to be assessed as sale of depreciable asset under Section 50 of the Act. In the connected case, the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of Rs.22.20 crores. Further the assessee and the purchaser have specifically stated in Clause 3.2 of the sale deed that the sale is on "slump sale basis" which is nothing but adoption of the said terms as contained in the above provision of the Income Tax Act. It is also to be taken note that the assessee knowing well the chance of transaction being treated as a "slump sale" for the purpose of assessment of capital gain furnished along with the return filed the chartered accountant's certificate in form 3EA prescribed under Rule 6H in terms of Section 50B(3) of the Income Tax Act. Even after annexing the Chartered Accountant's Certificate issued in the prescribed form for assessment under Section 50B of the Act, assessee claimed that capital gain is assessable on sale of the undertaking as sale of depreciable assets under Section 50 of the Act. The question now to be considered is whether the claim of the assessee is tenable or not. In this regard we have to consider the scope of Section 50 and Section 50B of the Act. In our view assessee's claim for assessment of capital gain under Section 50 of the Act is not tenable because the said Section provides for assessment of cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the aggregate value of total assets of the undertaking or division as reduced by the value of liabilities of such undertaking or division as appearing in its books of account." What is clear from the above is that Section 50B is the only provision which provides for computation of capital gains in the case of slump sale, even though sale of business undertaking as a going concern will involve sale of assets forming block of assets on which depreciation was being allowed. Assessee's counsel contended that when depreciable assets are sold, provision to be applied for assessment of capital gain is Section 50. However we are of the view that Section 50 applies only when an independent asset or a block of asset are sold on which depreciation was allowed and not when the industrial undertaking with depreciable assets are sold as a whole. In fact, when Section 50B provides for computation of capital gain on the sale of the undertaking it covers capital gain payable on depreciable assets forming part of the industrial undertaking also. In other words the distinction between Section 50 and 50B is that while Section 50 provides for computation of capital gain on the sale of only depre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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