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TMI Blog2016 (5) TMI 264X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of Rs. 14 crores. In the return of income, the assessee offered a sum of Rs. 10,30,06,590/- as short term capital gains in respect of the said transfer in accordance with the provisions of section 50B of the IT. Act. However, subsequently, the assessee filed a revised return withdrawing the aforesaid income by way of short term capital gains on the ground that the impugned transfer of the BOPP Films undertaking was not in the nature of slump sales within the meaning contained in section 2(42C) of the Act and therefore, capital gains u/s. 50B would not be leviable. It was contended before the AO that the impugned sale can be treated as slump sales only if no value is ascribed to any individual asset/liability. It was argued in course of assessment that as per the BTA, the current assets and liabilities were to be taken over by XIL at a mutually agreed amount for which value of individual assets was to be determined at the time of conveyance. The AR of the assessee referred to Article 2.3, 4.3 and 5.26 of the BTA in support of this contention that the net current asset were to be valued individually and payment for the same was to be made over and above the lump-sum considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The AO has also referred to the decision of Bombay High Court in the case of Premier Automobile Ltd. vs. ITO 264 ITR 193 (Bom) wherein the jurisdictional high court after considering a number of decisions on the issue of slump sale, has laid down certain tests for determining whether a transaction would be a slump sale or otherwise. The AO has examined the impugned sale on the basis of tests laid down by the Bombay High Court and has came to the conclusion that the impugned sale of the BOPP. undertaking was a slump sale. The AO has further referred to the decision of the ITAT, Hyderabad Bench in the case of Coromandel Fertilisers Ltd. 90 ITD 344 (Hyd) in which an identical issue came up for consideration of the ITAT wherein the value of the current assets were ascribed after the date of agreement and on that ground itself, it was claimed by the department that it was not a slump sale. The ITAT has clearly held that special procedures stipulated in the agreement for valuation of certain items do not detract from the concept of slump sale. It has further been observed by the ITAT that there is an intervening period between the sale agreement and the date of transfer. During this per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was therefore, not a slump sale. It is also pertinent to note that this decision was also related to a period prior to introduction of section 50B on the statute. I am therefore, of the opinion that the case laws relied upon by the AR does not in any way help the case of the appellant. There is no dispute that the BOPP undertaking has been sold for a lumpsum amount of Rs. 14 crores alongwith all its assets and liabilities including outstanding contracts, licenses, intellectual.properties rights etc. The services of all the employees of erstwhile BOPP undertaking have also been transferred to the buyer. The AO has rightly applied the ratio of the decision of the Bombay High Court in the case of Premier Automobiles Pvt. Ltd. vs. ITO 264 ITR 193 to the facts of the case for determining whether the impugned sale is slum sale or not. As discussed in para 3.8 of the assessment order, the facts of the present case fully satisfies the tests laid down by the jurisdictional high court for determining whether a transaction is a slum sale or not. As regards the objection of the appellant that the transfer of BOPP undertaking is not a slump sale as value of individual net current assets have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es that sale of undertaking as a going concern for a lump sum consideration of Rs. 14 crores. With regard to the contention of ld. AR that individual values has been ascribed to net current asset, we found that the AO has reproduced the individual items of assets/liabilities in para 3.6 and has held that most of the items have been taken over by the buyer at the book value with minor and negligible difference. Further the net current assets by nature are such that its value change from day-to-day, and, therefore, its exact value on the date of actual transfer cannot be determined at the time of entering into contract, which is usually much earlier than the date of conveyance. We found that even assignment of individual value to net current asset was only for the purpose of ascertaining the change in the value of such assets in the intervening period i.e. the date of agreement and the date of conveyance. The CIT(A) has also analysed the terms of BTA agreement and after applying the verdict of Hon'ble Supreme Court in the case of Artex Manufacturing Co. 227 ITR 260 and Electric Control Gear Manufacturing Co., 227 ITR 278, reached to the conclusion that these cases were pertaining to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 28 (ilia), (iiiib) and (iiic) or of any receipts by way of brokerage, commission, interest, rent, charges or any other receipt of similar nature included in such profits. First limb requires profits of the export business to be computed in terms of the provisions of sections 28 to 43 of the Income Tax Act, 1961. 'Second limb requires that 90% of independent incomes or non-operational business income referred to in Explanation (baa)(J) be excluded from the profits of the business. The distinction between the two limbs is quite clear in that the first limb covers only operational business income, which comes out of export turnover while the second limb refers to non-operational business income, which is in the nature of independent income having 170 element of export turnover. Explanation (baa) also makes it quite clear that any income which is not assessable under section 28 or which does not arise out of export business cannot be taken into account for working out the profits of the business for availing the relief under section 80HHC The view that we are taking in the matter is supported by the judgment of the Hon'ble Bombay High Court in the case of CIT vs. Bangalore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness. (3) The issue as to whether 90% if gross receipts or 90% of net receipts with reference to incomes falling under Explanation (baa)(1) should be considered. (4) Sales tax and excise duty would not form part of the total turnover in terms of the judgment of the Hon 'ble Supreme Court in the case of CIT vs. Lakshmi Machine Works, reported in 290 ITR 667 (SC). Assessing Officer shall give reasonable opportunity of hearing to the assessee before deciding upon the issues raised ill Ground No. 2. Hence. the appeal by the assessee on this ground is allowed for statistical purposes. " Respectfully following the same, we restore the matter to the file of the Assessing Officer to reexamine the issue in the light of the direction given by the Tribunal as reproduced above in A. Y. 1998-99. Ground No.2 is allowed for statistical purposes." In view of the above, respectfully following the decision of the coordinate bench, matter is restored back to the file of AO for deciding afresh as per the direction given by the Tribunal in assessee's own case. We direct accordingly. 11. Ground No.3 with regard to deduction in respect of corporate dividend tax was not pressed by ld. AR, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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