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TMI Blog2017 (3) TMI 682X X X X Extracts X X X X X X X X Extracts X X X X ..... We find that the lower authorities had completely misdirected themselves by erroneously applying the provisions of section 50B of the Act by taking into account proportionate liabilities (which are not related to the cold storage plant) and ignoring the fact that those liabilities are still reflected in the balance sheet as on 31.3.2009. Accordingly, we direct the ld AO to disallow ₹ 2,76,000/- being capital loss in the assessment and reframe the same accordingly. Accordingly, the grounds raised by the assessee are partly allowed. - I.T.A No.1767/Kol/2013 - - - Dated:- 10-3-2017 - Shri M. Balaganesh, AM Shri S. S. Viswanethra Ravi, JM For The Appellant: Shri I. Banerjee, FCA For The Respondent: Shri Sallong Yaden, Addl. CIT, Sr. DR ORDER Per Shri M. Balaganesh, AM: This appeal by assessee is arising out of order of CIT(A)-XXX, Kolkata vide appeal No. 291/CIT(A)-XXX/Wd-48(2)/2011-12 dated 09.01.2013. Assessment was framed by ITO, Ward-48(2), Kolkata u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the Act ) for Assessment Year 2009-10 vide his order dated 16.12.2011. 2. The assessee had raised the following grounds of appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upholding the invocation of provisions of section 50B of the Act in the facts and circumstances of the case. 3. The brief facts of this issue is that the assessee is an individual who had previously entered into a partnership with one Shri Prodyut Kumar Das vide partnership deed executed on 17.2.2005. The assessee along with his co-partner sought to purchase a running cold storage plant jointly. The investment in the said cold storage plant styled as Nutan Sarda Himghar (Previously known as M/s Sarda Himghar at the time of purchase) had been made by the assessee and his co-partner jointly. The assessee and his co-partner had, instead of buying the same in firm s name instead , decided to make the said investments in the lands and building forming part of in their own names. The registration of such purchases had therefore taken place in their own names as undivided owners . As a result, the cold storage plant continued to appear in their respective names rather than in the books of the firm. The assessee s own investment in the said infrastructure amounted to ₹ 52,76,000/- in aggregate over the years as under:- Original investment by Accepted and given effect to by As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and interests, made by the assessee in favour of the co-partner, leading to vesting of the entire fixed asset (represented by cold storage) at a stipulated final price of ₹ 50 lacs, the co-partner, instead of making a direct payment from his end, arranged to discharge and pay off such due, by making the assessee sell his investment in the cold storage, represented by its land and building, in favour of his wife, viz Smt Sikha Das. The details of such sale are as under:- Doc. No. 3614 for ₹ 17,00,000/- Doc. No. 3612 for ₹ 8,60,000/- Doc. No. 3613 for ₹ 1,40,000/- Doc. No. 3604 for ₹ 23,00,000/- 50,00,000/- In other words, the assessee relinquished all his assets and rights in the partnership including investment made by him in the cold storage by receiving ₹ 50 lacs as return of capital and others from the partnership firm. Accordingly, the assessee claimed the capital loss in his returns as below:- Amount received on retirement of partnership firm Running ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se the appellant has not been able to provide any information even during appeal proceeding regarding the actual value of net worth of the asset or the balance sheet and other details in respect of the partnership firm and whether the firm had offered to tax any amount consequent to its alleged dissolution u/s 45(4) of the Income Tax Act. Therefore, it is observed that eventhough the A.O. has considered the sale as slump sale which is not the correct approach considering that the appellant had only retired from the partnership firm and received his investments and profit therefrom, however the same are liable to be taxed as capital gains after reducing the cost of acquisition, therefore the action by the A.O. in taxing the transaction as LTCG in the hands of the appellant is held to be justified and upheld. Further in the absence of the relevant details, the estimate of net worth of the asset worked by the A.O. by reducing the proportionate liability is held to be justified. However, as discussed in para 1 above, the amount of ₹ 7,76,000/- is to be allowed as part of the cost of acquisition while calculating the LTCG. The final effect of ld CITA order would be determinat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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