9911796707
TMI Blog2000 (8) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... 50 of the Income-tax Act, 1961. Agreement dated 17-4-1989 as well as supplementary agreement dated 5-12-1989 containing the particulars of various assets and liabilities transferred by the assessee to VISCO and the consideration in respect thereof have been placed on record. In the agreement dated 17-4-1989 there are 10 articles in the preamble, the first nine articles enumerate the various assets of the computer diskettes unit which are being sold. Article 10 in the preamble reads as under: "PCL have agreed to sell and transfer and VISCO have agreed to purchase and accept transfer of the said properties as also the said movables, the said inventories (as on the date of taking over of operations hereinafter defined) as also transfer to VISCO such of the security deposits as are transferable and also the transfer of the said advances, the said book debts, the said trade mark and the said technological documents on the terms and conditions hereinafter contained.' Now we may refer to main clauses in the aforesaid agreement. Under clause (2) of the agreement prices of various assets, movable and immovable, being sold to VISCO are enumerated aggregating to Rs. 224 lakhs. Clause (2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st June, 1989 which is described as the date of takeover of operations. Article 3 in the preamble refers to the determination of exact values of various assets determined at Rs. 2,10,08,445 as set out in Annexure A to the agreement. The article 3 reads as under: 'By clause No. 4 of the said agreement dated 17th April, 1989, on the date of takeover of operations, the exact value of assets including cash and bank balances, were required to be determined and the necessary adjustments to be made in the sum of Rs. 2,24,00,000. The said purchase consideration in terms of the said agreement has now been determined at Rs. 2,10,08,445 as set out in Annexure 'A' to this agreement. As against this, a sum of Rs. 55,00,000 was paid by VISCO to PCL as advance which has been adjusted against this purchase consideration.' Annexure to the supplementary agreement lists out the fixed assets, current assets and the values thereof. The liabilities like overdraft from State Bank of Patiala and institutional liabilities and outstanding liabilities for expenses etc. have also been indicated in the annexure to the agreement. These liabilities aggregate to Rs. 2,63,01,338. The assets taken over as liste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would apply. According to the Id. counsel in the sale agreement dated 17-4-1989 no separate value of depreciated assets like plant and machinery building and furniture is exhibited in the Second Schedule and it was only at the time of takeover of operations that supplementary agreement dated 1-6-1990 indicates the itemised value of various assets of the Pinsel unit sold by the assessee-company. The Id. counsel further argued that section 50 is a deeming provision which envisages excess of sale consideration over WDV as deemed capital gain arising from the transfer of short term capital assets and the deeming provisions would not be applicable in the instant case. The Id. counsel further placed reliance on the following decisions: 1. CIT v. Mugneeram Bangur & Co. (Land Dept) [1965] 57 ITR 299 (SC). 2. CIT v. West Coast Chemicals & Industries Ltd. [1962] 46 ITR 135,142 (SC). 3. Delhi Tambaku & Udyog Ltd. v. IAC [1987] 20 ITD 718 (Delhi). 4. CIT v. Srinivasa Setty [1981] 12 8 ITR 294 (SC). 9. The ld. D.R., on the other hand placed reliance on the facts and reasoning indicated by the Id. CIT(A) in the impugned order and argued that the short term capitalgain levied by the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been specifically attributed to various assets held by the Pinsel unit at the time of transfer. In the facts of the case the decision of Hon'ble Supreme Court in Artex Mfg. Co. Ltd.'s case would apply. In the said decision their Lordships held at page 276 of the report: "It is no doubt true that in the agreement there is no reference to the value of the plant, machinery and dead stock. But on the basis of the information that was furnished by the assessee before the Income-tax Officer, it became evident that the amount of Rs. 11,50,400 had been arrived at by taking into consideration the value of the plant, machinery and dead stock as assessed by the valuer at Rs. 15,87,296. This is not a case in which it cannot be said that the price attributed to the items transferred is not indicated and, hence section 41(2) of the 1961 Act cannot be applied. We are, therefore, unable to agree with the view of the High Court that section 41(2) of the 1961 Act is not applicable." The facts in the instant case stand on a stronger footing inasmuch as sale consideration with regard to various assets has been indicated in the sale agreement itself and again at the time of takeover, adjustments wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
