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TMI Blog2013 (10) TMI 511X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts and in the circumstances of the case and in law the Ld CIT(A) has erred in not appreciating the fact that the working of net worth submitted by the Chartered Accountant on Form No.3CEA had been wrongly calculated at Rs.23,14,24,472/- while the difference between the aggregate value of total, assts minus liabilities worked out to Rs.4,40,01,716/- only and thus reducing the short term capital gain from Rs.20,50,98,284/- to Rs.8,08,55,510/- thereby giving relief of Rs.12,42,42,474/-. 3. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of appeal. 2. The brief facts of the case are that assessee is in the business of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken over has been shown Rs.13,81,63,094/- and the loans outstanding against such fixed assets amounted to Rs.9,32,61,378/- but as the aforesaid loans have not been taken over by the purchaser of unit and have been repaid by the appellant company itself, therefore, there was no occasion to reduce the same from WDV of fixed assets to compute the net worth. b) That Ld Assessing Officer has failed to consider the letter dated 25.12.2010 sent to ld Assessing Officer wherein it has been clarified that revised calculation of capital gain works out at loss of Rs.1,24,05,868/- which is supported by business acquisition agreement filed during the course of assessment proceedings. In this respect, the revised calculation of capital ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sales consideration Rs.21,90,18,604. Paper Book Page 71 ) The sales consideration has been duly specified in clause no. 8.1 of the Business Acquisition Agreement dated 1.11.2007 (Paper Book Page 61) entered into between the appellant company and the purchaser and therefore it will be correct to fix the value of sales consideration at Rs.21 ,90, 18,604/-. As regards the computation of net worth of the undertaking, the appellant company in the return of income has computed the net worth as under:- WDV of Fixed assets transferred by way of Slum Sales. Rs.13,81,63,094/- Add: Amount of secured loans repaid out of slump sales consideration. Rs. 9,32,61,378/- Rs.23,14,24,47 However, the AO in the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,98,284/- as against the correct working of Rs.8,08,55,51O/- as computed above and thus the appellant is allowed relief of Rs.12,42,42,774/-. Therefore, the ground No.2 of appeal is partly allowed." 5. Aggrieved, the revenue is in appeal before us. 6. At the outset, Ld DR submitted that capital gain to the assessee had occurred on account of profit on slump sale and profit has to be calculated as per the provisions of section 50B of the Act. He referred to Form No. 3CEA and submitted that sale consideration was Rs.25 crores and Ld CIT(A) has wrongly taken at Rs.21,90,18,604/-. He further argued that CIT(A) has taken this figure after reducing current liabilities and adding current assets which is not as per the provisions of section 50B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and the provisions of agreement entered into between the seller and purchaser cannot over-ride the provision of slump sale as provided u/s 50B. He submitted that as per agreement Rs.21.90 crores was to be paid to the seller and Rs.3.10 crores was to be paid for net current liabilities making total consideration of Rs.25 crores/ He further submitted that for the purpose of calculation of net worth of an undertaking assets and liabilities appearing in the balance sheet only has to be considered. 9. We have heard the rival submissions of both the parties and have gone through the material available on record. There are two points for consideration to decide the case. One is regarding calculation of net worth of undertaking and the second ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... worth the aggregate value shall be:- a) In the case of depreciable assets, the WDV of the block of assets determined in accordance with the provisions contained in sub items (c )of item (i) of sub clause (6) of section 43. b) In the case pf capital assets in respect of which the whole of the expenditure has been allowed or is allowable as a deduction u/s 35AD - nil & (c ) in the case of other assets the book value of such assets. 11. From the above explanation to the provision it is very much clear that for the purpose of calculation of net worth of an undertaking, the following is to be followed"- a) WDV of admissible assets + b) Book value of other assets. &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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