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TMI Blog2023 (1) TMI 524X X X X Extracts X X X X X X X X Extracts X X X X ..... fulfilled the two condi tions which the Revenue itself admitted in its written submissions as under:- 2. To invoke the powers under 263 the twin conditions to be met are (i) the order of AO is erroneous and (ii) the order is prejudicial to the interests of revenue. Once the second condition of prejudice caused to Revenue is not fulfilled, the revision order has to fail. We quash the revision order and allow the appeal of assessee. - ITA No.: 1049/CHNY/2019 - - - Dated:- 11-1-2023 - Shri Mahavir Singh, Vice President And Shri G. Manjunatha, Accountant Member For the Appellant : Shri T. Banusekar, CA For the Respondent : Shri R. Mohan Reddy, CIT ORDER PER MAHAVIR SINGH, VICE PRESIDENT: This appeal by the assessee is arising out of the Revision order passed by the Principal Commissioner of Income Tax (Appeals)-1, Coimbatore in C.No.120(25)/263/PCIT-1/CBE/2017-18 dated 14.02.2019. The assessment was framed by the ACIT, Corporate Circle-2, Coimbatore for the assessment year 2014-15 u/s.143(3) of the Income Tax Act, 1961 (herein after the Act ), vide order dated 26.12.2016. 2. The only issue in this appeal of assessee is as regards to the revisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e interest of Revenue. Accordingly show cause notice was issued. 4. The PCIT noted the above f acts and after discussing various case laws and more particularly the ITAT, Mumbai Special Bench in the case of DCIT vs. Summit Securities Ltd., [2012] 135 ITD 99 (Mumbai) (SB) observed that the amount of net worth will be negative figure of Rs.1,83,92,317/- and the same amount will be chargeable to tax under the head capital gains . For this, he observed in para 27, 28 29 as under and directed the AO to redo the assessment afresh after allowing reasonable opportunity of being heard to the assesse:- 27. The summary and thereby the conclusion is that the amount of Net worth will be a negative figure of Rs.1,83,92,317/- and not Zero. Resultantly the amount of capital gain chargeable to tax will be on Rs.1,82,92,317/-. Reliance is also placed on the decision of the ITAT Mumbai Bench I (Special Bench) [2012] 19 taxmann.com (Mum). In the case of DCIT Vs. Summit Securities Ltd. 28. In view of the above the order made by the AO dated 26-12-2016 for the Asst. Year 2014-15 in the case of the captioned assessee, since made without due verification is set aside in exercise of the pow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.1 The ld.AR also took us thro ugh page 4 of assessee s paperbook wherein working for sale of ventilator division and computation made u/s.115JB of the Act is taken at Nil . The ld.AR also took us through the note submitted before the AO during the course of assessment proceedings and in its audit report i.e., Note on Exceptional Item, which is enclosed in assessee s paper-book at page 5 and the same reads as under:- During the Financial Year 2013-14 an amount of Rs.1,83,92,3177- has been shown as an exceptional item in the Profit and Loss Account which represents the gain on transfer of Medical Ventilator Division on a Slump Sale Basis. The Medical Ventilator Division was incurring heavy losses mainly due to the fact that it was not the core business of the Assessee. However considering the potential of the low cost Medical Ventilators, Skanray Technologies Private Limited, Mysore took over the Medical Division on a Slump Sale Basis at Zero Value taking over all the assets and liabilities as is where is basis as on 14.11.2013. The Assessee, considering cash losses that were being incurred, decided to transfer the Division without any further liability. The total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital gains of slump sale i.e., Rs.143 crore + negative net worth of Rs.157 crore. The ld.AR stated that he is arguing the matter on merits and on merits even if negative worth of Rs.1,83,92,317/- will be added to the sale consideration of 0 , it will remain minus (-). Hence, he stated that the assessm ent order passed by AO may be erroneous but not prejudicial to the interest of Revenue because no capital gain will be chargeable to tax. Hence, he requested that the revision order passed by PCIT is liable to be quashed. 6. On the other hand, the ld.CIT-DR argued that in this case, the AO framed assessment u/s.143(3) of the Act but has not brought the capital gain arising of slump sale to tax and hence, the assessment order is erroneous and prejudicial to the interest of Revenue. The ld.CIT-DR stated where the order passed by AO is erroneous he cited the following reasons:- (i) Admitted position (ii) Slump Sale (iii) Negative Networth (iv) AO has not brought the capital gains arising on Slump sale to tax He argued that once the slump sale is accepted, the AO has simply followed the method of computation of capital gains and determined the amount of capital gain ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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