M/S. MANISH FILMS PVT. LTD.,INDORE vs. THE ITO 3(1), INDORE

आदेश / O R D E R

PER KUL BHARAT, J.M: This appeal by the assessee is directed against order of

the CIT(A)-I, Indore dated 30.10.2014 pertaining to the assessment year 2010-11. The assessee has raised

following grounds of appeal:-

assessee filed return of income declaring Nil income on

29.9.2010. The case was selected for scrutiny assessment.

Assessing officer thereafter issued statutory notice. In

response to notice, the assessee attended the assessment

proceedings and filed explanation to the query raised

during the assessment proceedings. The assessing officer

observed that assessee company had claimed slump sale of

asset of the company at Rs.2,25,00,000/-. However, as per

the stamp valuation authority, value was adopted at

Rs.4,18,00,000/-. The A.O. therefore adopted the value

u/s 50C of the Act and assessed the income at

Rs.2,09,99,101/-. Against this, the assessee preferred an

appeal before Ld. CIT(A) who after considering submissions

partly allowed the appeal. Thereby, the Ld. CIT(A) affirmed

the finding of the assessee in respect of adopting the value

of property as per the stamp valuation authorities. Against

this finding, the assessee is in present appeal. Ground

Nos.1 to 2.6 are against adopting the value as per the

stamp valuation authority. Ld. Counsel for the assessee

vehemently argued that the authorities below have failed th

appreciate the facts in right perspective and submitted that

section 50C of the Act would not be applicable on the facts

of the present case as in the present case, the assessee has

made slump sale. It has to be covered u/s 50B of the Act.

As per section 50B of the Act, the valuation assessed by

stamp valuation authorities cannot be adopted.

provisions of section 50B of the Act and sale deed executed

by the vendor assessee. He also drew our attention to the

newspaper clippings by the vendee of the property in

support of contention that the sale so executed was a

slump sale. He has also drawn our attention to the

definition of slump sale as defined u/s 2(42C) of the Act.

In support of this contention Ld. Counsel has relied on the

decision of the special bench of this Tribunal, Mumbai in

the case of DCIT Vs. Summit Securities Ltd. in ITA

No.4977/Mum/2009. Further, Ld. Counsel for the

assessee submitted that even if it is not treated as a slump

sale, in that event also there would not be application of

section 50C of the Act as the property in question is a lease

hold property on 30 years lease by Indore Development

Authority. He submitted that what is transferred are

merely the lease hold rights pertaining to the capital

assets. Ld. Counsel in this regard has relied upon the

judgement of Hon'ble Mumbai High Court rendered in the

case of CIT Vs. Green Hotels and Estates Pvt. Ltd. in ITA

No.735 of 2014 reported in 389 ITR 0068 (Bom.). Ld.

Counsel further relied on the decision of coordinate bench

of the Tribunal in the case of Atul G. Puranik Vs. ITO

reported in 11 ITR 0120. The reliance is also placed on the

decision rendered by the coordinate bench of this Tribunal

in the case of Kancast Pvt. Ltd. Vs. ITO (2015) 68 SOT

0110 (Pune). Ld. Counsel submitted that in the light of

these decisions, the assessing officer ought not to have

invoked the provisions of section 50C of the Act.

submissions of the assessee and supported the orders of

the authorities below. He submitted that the contention of

the assessee that the transfer of the sale was a slump sale

is contrary to the records. He submitted that the

subsequent argument with the buyer would not entitle the

assessee to claim the transactions as slump sale. He

submitted that if the claim of the assessee is accepted,

then in every such transaction, the tax payer would claim

benefit of section 50B of the Act on the basis of the

manufactured possession letter. He pointed out that

clause (5) of the sale deed was executed on 18.9.2009. It

categorically states that the possession of the property in

question has been handed over. So subsequent possession

letter is merely a device to bring the transaction within the

ambit of section 50B of the Act, which is not permissible

under the law. In respect of the submission that even

otherwise also provisions of section 50C of the Act would

not be applicable as the assessee has merely transferred

the lease hold rights which it had from the Indore

Development Authority for 30 years. He submitted that the

lease hold rights for 30 years cannot be considered merely

as least hold rights but to be considered rights in

perpetuity. Therefore, any lease hold rights above 12 years

to be treated as right in perpetuity and the provisions of

section 50C of the Act would be applicable.

materials available on record and gone through the orders

of the authorities below. The first contention of the

assessee is that the transaction would fall within the ambit

of section 50B of the Act. Therefore, provisions of section

50C of the Act cannot be applied. It is contended that the

transaction is a slump sale and a strong stress is laid on

the subsequent possession letter and the notification made

by the vendee in news paper. For the sake of clarity, the

relevant clauses of sale deed executed by the assessee are

to be considered. As per the clause (2), the property is

described as land and building and it is also stated that the

electricity and water connection in running condition is

part of the sale. This clause does not say anything about

the furniture and fixtures and other gadgets. Admittedly,

the assessee has been running a cinema hall. So it cannot

be assumed that the cinema hall was without any

machinery, furniture or other gadgets necessary for

displaying the movies. Further, it is noted that as per

clause (5) of the sale deed, it is stated that vacant

possession of the building has been handed over by the

assessee to the vendee. These two clauses makes it clear

that no other articles, machinery, etc. were subject of the

sale. Before assessing officer it has been categorically

stated by the assessee company that it sold cinema

undertaking in the name and style of M/s. Manmandir

cinema. We are unable to accept contention of the

assessee that the subject matter of the transaction was the

undertaking namely M/s. Manmandir but as per the sale

deed, it was only land and building. Therefore, the case

laws as relied by the Ld. Counsel for the assessee would be

of no help to the assessee. The claim of the assessee that it

was a slump sale has been rightly rejected by the

authorities below. Now coming to another submission of

the assessee that what is transfer is the lease hold rights.

The revenue has not disputed the fact that the property in

question was on the basis of lease hold rights. Even in the

sale deeds, it has been described so. The Hon'ble Bombay

High Court in the case of CIT Vs. Green Field Hotels and

Estates Pvt. Ltd. (supra) considering the question of law

urged by the revenue “whether in the facts and in the

circumstances of the case and in law the Tribunal was

justified in upholding the order of the CIT(A) in deleting the

addition of long term capital gain of Rs.80,58,000/- on the

ground that provisions of section 50C of the I.T. Act, 1961

were not applicable to transfer of land and building being a

lease hold property”. The said question was dismissed on

the ground that the revenue had not preferred any appeal

against the order of the Tribunal rendered in the case of

Atul G. Puranik Vs. ITO (2011) 11 ITR 0120 on the

question of law by following the judgement of the Hon'ble

Apex Court in the case of Union of India Vs. Satish P. Shah

249 ITR 221. The Ld. Counsel for the assessee has also

relied upon the decision of the coordinate bench rendered

in the case of Atul G. Puranik Vs. ITO (supra). The facts in

that case as noted by the Tribunal that the assessee was

allotted rights in the plot on 16th August, 2004 as

compensation for the acquisition of lands acquired by the

Special Land Acquisition Officer way back in the year

1970/1972. It is noted that the lease hold rights were for

60 years. The Tribunal after considering the various case

laws has held as under:

6. We find that before the authorities below no such

submissions were made. Merely it was stated that the A.O.

ought to have referred the valuation to the Valuation

Officer. However, this being the legal issue the assessee

has relied upon the decision of coordinate bench. We

therefore, set aside this issue to the file of the Ld. CIT(A) for

his decision. Ground Nos.1 to 2.6 are partly allowed for

statistical purposes.

“That the Ld. CIT(A) erred in upholding the AO's action in not considering/entertaining the claim made by the appellant during the assessment proceedings of allowing deduction u/s 43B in respect of interest actually paid to financial institution during the year, which was suo moto disallowed in the earlier years due to non payment. That on the facts and in the circumstances of the case the appellant is legally entitled to claim deduction u/s 43B in respect of such interest in this year, and it is prayed that the same may very kindly be allowed.” Ld. Counsel for the assessee submitted that the

authorities below were not justified in not allowing the

claim of the assessee. He submitted that the Ld. CIT(A)

disallowed the claim merely on the basis for want of any

details or evidence. Ld. Counsel contended that the proof

of payment of interest was duly filed before the A.O. He

drew our attention to paper book pg.no.71. He submitted

that ledger account is enclosed at paper book page nos.73

& 74. He submitted that the authorities ought to have

verified from the MP Finance Corporation.

materials available on record and gone through the orders

of the authorities below. We find that Ld. CIT(A) has not

rejected the claim on the ground of allowability. The same

has been rejected on the basis of evidence being not

produced. We find before the A.O. it was categorically

stated that the assessee has paid interest to the M.P.

Finance Corporation being a state entity. The A.O. ought

to have verified from the M.P. Finance Corporation. Under

the facts disbelieving the assessee was not called for. 15

Therefore, we direct the A.O. to delete this addition. This

ground of the assessee is allowed.

separate adjudication.

partly allowed for statistical purposes.

Order was pronounced in the open court on 10 .01.2019.

Sd/- Sd/- (MANISH BORAD) (KUL BHARAT) ACCOUNTANT MEMBER JUDICIALMEMBER

Indore; �दनांक Dated : 10/01/2019 VG/SPS

Copy to: Assessee/AO/Pr. CIT/ CIT (A)/ITAT (DR)/Guard file. By order

Assistant Registrar, Indore