9911796707
TMI Blog2003 (1) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... wing the difference of the value between the written down value and the price at which it is alleged, there is no scope for application of section 41(2) in the present case. - On the facts, in this case, section 41(2) cannot be attracted, as rightly held by the learned Tribunal. We, therefore, answer the question referred to in the affirmative in favour of the assessee. The reference is, thus, answered. - - - - - Dated:- 21-1-2003 - Judge(s) : D. K. SETH., R. N. SINHA. JUDGMENT D.K. SETH J.-The question to be answered, in this reference under section 256(1) of the Income-tax Act, 1961, is: "whether, on the facts and in the circumstances of the case, the Tribunal was justified on facts and in law in deleting the profit of Rs. 21,02,1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fferent items of assets. Now the question is whether this apportionment to itemwise assets will attract the application by section 41(2) of the Act. In our view, section 41(2) applies where assets are sold. The Legislature has never intended to apply this provision in a case where the entire business is sold. It is not attracted where transfer was made without indicating any itemwise consideration. Inasmuch as, when the entire concern is sold, the business is no more retained and carried on. Selling of the whole concern or business, so long carried on is not the business. It is the giving up or closing down or cessation of the business. Therefore, the receipt thereout cannot be an income from business. It can at best be a capital gain, if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not be applied since there was nothing to indicate any price attributable to itemwise assets. In CIT v. Artex Manufacturing Co. [1997] 227 ITR 260 (SC), on which learned counsel for the respondent had placed much reliance, the apex court had followed the principle laid down in Mugneeram Bangur and Co.'s case [1965] 57 ITR 299 (SC), viz., where there is a slump transaction and the business is sold as a going concern, what is to be seen is whether any portion of the slump price is attributable to the stock-in-trade and if on the basis of the facts, it can be found that a particular price is attributable to a particular item, then the excess amount would be chargeable to tax. Learned counsel for the respondent had attempted to point out t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd.'s case [1999] 235 ITR 21 (Mad), it was pointed out that the compensation received by the assessee could be attributable to the various items of assets taken over by the Government of Tamil Nadu and it was also possible to attribute the compensation to the particular item of asset taken over by the Government. In CIT v. B.M. Kharwar [1969] 72 ITR 603 (SC), it is laid down that where the business is sold indicating itemwise consideration for depreciable assets, section 41(2) is attracted. This case did not deal with a case where the entire business was sold as a going concern. Therefore, it is not possible to find out the answer to the question we are concerned with from the ratio decided in this case. In this case the price of the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, this apportionment does not make it a sale of the assets when the entire factory is sold as a going concern. Thus, until and unless it is pointed out from the facts that the particular itemwise valuation is attributable, the principle cannot be attracted. In the present case, however, valuation of different items was indicated to make out the price fixed. But, however, Mr. Pal had pointed out that these are the prices as shown in the books of account in respect of those items. However, learned counsel for the respondent has also not been able to show that that price was not the shown price being the written down value in the books of account or that there is any difference between these amounts and the amounts receivable by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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