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TMI Blog2015 (2) TMI 204X X X X Extracts X X X X X X X X Extracts X X X X ..... e on account of the said transfer. The Balance sheet of the propertory concerned was worked out on 31.08.1992 and on that basis, the capital account was arrived at Rs. 48,35,773/-. Thereafter, the Assessing Officer, passed order under Section 143(3) on 29.3.1996 and made an addition of Rs. 48,35,733/- holding that the appellant is liable to short term capital gains. In the said assessment order, the Assessing Officer also made an addition of Rs. 9,001/- relating to motor car expense. 2.1. Against the order of the Assessing Officer, the appellant filed an appeal before the Commissioner of Income Tax. The CIT(A) after going through the facts of the case and the case law relied upon by the assessee held that the order passed by the Assessing Officer was correct in so far as levy of capital gain is concerned. However, the CIT(A) held that a part of the gain was long term capital gain and the assessee is liable to pay tax on capital gains accordingly. The CIT(A) confirmed the addition of motor car expense made by the Assessing Officer. 2.2. Being aggrieved and dissatisfied with the order of the CIT(A), the assessee again filed an appeal before the Tribunal. The Tribunal upheld the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is order as the Assessing Officer has concluded that Rs. 48,35,773/- is a short term capital gain. 4.2. He further submitted that before the Assessing Officer, the assesseee vide letter dated 28.2.1996 submitted that "since there is no itemised said of any asset, there is no sale proceeds for individual item comprised in the "going concern" and for this reason, the excess of the sale proceeds over the net assets of the proprietor-ship unit has been treated as longterm capital gains". However, the Assessing Officer has not accepted the said request of the assessee. 4.3. Mr. Soparkar, learned senior advocate for the appellant-assessee has submitted that the Tribunal has passed its order on the basis of the decision of the Apex Court in the case of Commissioner of Income v. Artex Manufacturing Co. reported in 227 ITR 260. 4.4. Learned senior advocate for the appellant-assessee has relied upon the following decisions in support of his contentions:- (i) In the case PNB Finance Ltd. v. Commissioner of Income Tax-I, New Delhi, reported in 307 ITR 75 (SC). (ii) In the case of Commissioner of Income Tax v. Garden Silk Weaving Factory, reported in [2005] 279 ITR 136. (iii) In the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as under:- "3. This appellant's appeal before the Commissioner of Income-tax (appeals) was allowed. However, the order of the further appeal of the Department before the Income tax appellate Tribunal was allowed. The appellant has approached this Court and has submitted that the Tribunal was wrong in upholding the Assessing Officer's order. He has relied upon the decision of this Court in National Thermal Power Company Ltd. v. CIT [1998] 229 ITR 383, to contend that it was open to the assessee to raise the points of law even before the Appellate Tribunal. 4. The decision in question is that the power of the Tribunal under Section 254 of the Income Tax Act, 1961, is to entertain for the first time a point of law provided the fact on the basis of which the issue of law can be raised before the Tribunal. The decision does not in any way relate to the power of the Assessing Officer to entertain a claim for deduction otherwise than by filing a revised return. In the circumstances of the case, we dismiss the Civil appeal. However, we make it clear that the issue in this case is limited to the power of the assessing authority and does not impinge on the power of the Income Tax Appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture incurred wholly and exclusively in connection with such transfer; (ii) the cost of acquisition of the asset and the cost of any improvement thereto: Provided that in the case of an assessee, who is a non-resident, capital gains arising from the transfer of a capital asset being shares in, or debentures of, an Indian company shall be computed by converting the cost of acquisition, expenditure incurred wholly and exclusively in connection with such transfer and the full value of the consideration received or accruing as a result of the transfer of the capital asset into the same foreign currency as was initially utilised in the purchase of the shares or debentures, and the capital gains so computed in such foreign currency shall be reconverted into Indian currency, so, however, that the aforesaid manner of computation of capital gains shall be applicable in respect of capital gains accruing or arising from every reinvestment thereafter in, and sale of, shares in, or debentures of, an Indian company : Provided further that where long-term capital gain arises from the transfer of a long-term capital asset, other than capital gain arising to a non-resident from the transfer of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual employees for the immediately preceding previous year to such previous year, by notification50 in the Official Gazette, specify, in this behalf. 5.4. Mr. Bhatt, learned senior advocate has also drawn our attention to Section 50(2) of the Income Tax Act, which reads as under:- "50.(2) where any block of assets ceases to exist as such, for the reason that all the assets in that block are transferred during the previous year, the cost of acquisition of the block of assets shall be the written down value of the block of assets at the beginning of the previous year, as increased by the actual cost of any asset falling within that block of assets, acquired by the assessee during the previous year and the income received or accruing as a result of such transfer or transfers shall be deemed to be the capital gains arising from the transfer of short-term capital assets." 5.5. By making aforesaid submissions, learned advocate for the respondent-revenue has submitted that this Court may dismiss this appeal and confirm the impugned order of the Tribunal. 6. We have heard learned senior advocates appearing for both the parties and perused the material on record. We have also minutely pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital asset to income-tax. In other words, it charges surplus which arises on the transfer of a capital asset in terms of appreciation of capital value of that asset. In the said judgment, this Court held that the "asset" must be one which falls within the contemplation of Section 45. It is further held that, the charging section and the computation provisions together constitute an integrated Code and when in a case the computation provisions cannot apply, such a case would not fall within Section 45. In the present case, the Banking Undertaking, inter alia, included intangible assets like, goodwill, tenancy rights, man power and value of banking licence. On facts, we find that item-wise earmarking was not possible. On facts, we find that the compensation (sale consideration) of Rs. 10.20 cr. was not allocable item-wise as was the case in Artex Manufacturing Co. (supra)." 7. The aforesaid two questions also came for interpretation in the of Garden Silk Factory (supra). Wherein in paragraph Nos. 4, 7, 8 and 10 of the said decision, the Court had held as under:-a "4 Mr.Tanvish U.Bhatt, learned Standing Counsel appearing on behalf of the applicant revenue assailed the order of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt or machinery, has to be (a) owned by the assessee, (b) used for the purpose of business of the assessee, (c) should have written down value and actual cost, and (d) there should be excess which does not exceed the difference between the actual cost and the written down value which shall be chargeable to tax as income of the business of the previous year in which monies payable for such building, machinery, plant or furniture became due. Therefore, for each asset which is sold the Assessing Officer must have with him the actual cost, WDV and the sale consideration. In absence of the same, Section 41(2) of the Act cannot be applied. In a case like the present one where the entire business is sold as a going concern with all assets and liabilities it is apparent that the provision cannot be invoked unless and until the aforesaid information is available with the Assessing Authority. It is in this context that the ratio of the Apex Court's decision in case of CIT Vs. Artex Manufacturing Company (supra) has to be appreciated and applied when it is observed that provision of Section 41(2) of the Act can be applied on the basis of the information that may be available with the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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