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2021 (1) TMI 1284

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..... ence, the net worth of the assets does not include the liability of Rs.21.50 Lakhs, (as it is discharged by the assessee). There is no evidence brought on record by the department that the buyer has paid the assessee any amount more than Rs.51.50 Crores. The buyer has received the assets without any liability and therefore the net worth of the asset is Rs.55,14,38,969/-. In such circumstances, it cannot be said that the net worth of the asset has to be further reduced by the liability because the liability has already been discharged by the assessee only. Appeal of assessee is allowed. - I.T.A. No. 2311/HYD/2018 - - - Dated:- 4-1-2021 - SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER For the A .....

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..... (net of liabilities) transferred as on the date of transfer, amounted to Rs.49,80,52,582/-. The assessee further submitted the details, according to which the net worth of the undertaking under the I.T.Act was Rs.55,14,38,969/- and thereby, Short Term Capital Loss was computed at Rs.3,64,38,969/-. In support of computation of net worth of the undertaking, the assessee submitted Form-3CEA issued by the accountant. The assessee also filed information regarding the loan sanctioned letter and project cost of Jazz Cinemas Pvt. Ltd. On going through the said details, the AO observed that the Jazz Cinemas Pvt. Ltd., has directly paid a sum of Rs.21,50,00,000/- (to the creditors of M/s.SPI Cinemas Pvt. Ltd., the assessee herein) to SBI and the bal .....

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..... the CIT(A), who confirmed the order of the AO and the assessee is in second appeal before us by raising the following Grounds: The grounds of appeal listed below are without prejudice to each other. 1. The order of the learned Commissioner of Income-tax (Appeals)-6, Hyderabad ['CIT] is erroneous, bad in law, prejudicial to the Appellant and contrary to the facts and circumstances of the case. Short term capital gains on slump sale 2. The learned CIT has erred in facts and circumstances of the case by not appreciating the fact that the Slump sale deed does not transfer bank loan amounting to INR 21,50,00,000 as part of the undertaking. 3. The learned CIT has erred by including the liability as part of the net wort .....

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..... placed. It is submitted that as per the terms of slump sale itself, the liability of Rs.21.50 Crores was not to be considered for computing net worth of the company and therefore, the same was not taken into consideration. He referred to the slump sale deed and Clause No.3 thereof, wherein it is mentioned that the total consideration is of Rs.51.50 Crores, out of which the purchaser would pay Rs.21.50 Crores directly to the bank and the balance consideration of Rs.30 Lakhs would be paid to the assessee. He therefore submitted that both the AO as well as the CIT(A) have mis-construed the terms of slump sale and reduced the liability from the net worth of the assets and therefore have arrived at Short Term Capital Gain. 6. The Ld.DR, on th .....

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..... is to be considered that the liability has been discharged by the assessee and is no longer the liability of the purchaser. Hence, the net worth of the assets does not include the liability of Rs.21.50 Lakhs, (as it is discharged by the assessee). There is no evidence brought on record by the department that the buyer has paid the assessee any amount more than Rs.51.50 Crores. The buyer has received the assets without any liability and therefore the net worth of the asset is Rs.55,14,38,969/-. In such circumstances, it cannot be said that the net worth of the asset has to be further reduced by the liability because the liability has already been discharged by the assessee only. 8. In view of the above, the appeal of assessee is allowed. .....

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