SIR SHADILAL ENTERPRISES LIMITED vs. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 23 (2), NEW DELHI

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ITA/29/2024HC DelhiDLHC01000460202410 January 2024Bench: HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV,HON'BLE MR. JUSTICE YASHWANT VARMA3 pages
AI SummaryRemanded

What did the High Court hold?

The Delhi High Court, while considering the issue of capital gains under Section 50B of the Income Tax Act, 1961, noted that the assessee had brought to its attention a ledger entry showing a profit of Rs. 49,19,22,401/- on the sale of UNN Sugar Unit, which was subsequently reversed in the assessee's books. The assessee contended that this point was pressed before the Income Tax Appellate Tribunal (ITAT) but was not considered. The High Court, in view of this submission and while keeping all contentions of both parties open, disposed of the appeal at that stage. It granted the appellant liberty to move the ITAT for rectification of its order. The High Court did not decide the merits of the capital gains computation or the tax liability.

What were the facts?

The appellant, Sir Shadilal Enterprises Limited, is challenging an order related to capital gains tax. The Assessing Authority noted that the Definitive Agreement for the sale of UNN Sugar Complex indicated a consideration of Rs. 75,50,00,000. However, the assessee's sub-ledger for Control GL: 5201 showed a consideration of Rs. 155,30,55,105.94, which included net current assets. The conveyance deed also stated Rs. 75.50 Cr as the consideration. Crucially, a ledger entry dated 30.09.2014 showed the assessee computed a profit on the sale of UNN Sugar Unit at Rs. 49,19,22,401, which was not factored into its capital gains computation. The appellant stated that this entry was later reversed in its books, and this point was pressed before the ITAT but allegedly not considered.

What were the issues?

1. Whether the ITAT failed to consider the assessee's contention regarding the reversal of a ledger entry showing a profit of Rs. 49,19,22,401/- on the sale of UNN Sugar Unit, which was relevant for computing capital gains under Section 50B of the Income Tax Act, 1961? Assessee's Contention: The assessee argued that a significant ledger entry reflecting a profit of Rs. 49,19,22,401/- was made in its books concerning the sale of the UNN Sugar Complex. This entry was subsequently reversed. The assessee contended that this reversal and the initial profit calculation were crucial for determining the correct capital gains. The assessee further argued that this specific ground was raised before the Income Tax Appellate Tribunal (ITAT), but the ITAT failed to notice or consider it in its order. Therefore, the assessee sought liberty to move the ITAT for rectification. Revenue's Contention: The judgment does not record any specific contentions made by the revenue on this particular issue.

Which sections of the Income-tax Act were involved?

Section 50B

AI-generated summary — verify with the full judgment below

$~66 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 29/2024 SIR SHADILAL ENTERPRISES LIMITED ..... Appellant Through: Mr. Inder Paul Bansal and Mr. Vivek Bansal, Advocates. versus THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 23 (2), NEW DELHI ..... Respondent Through: Mr. Puneet Rai, Sr. SC with Mr. Ashvini Kumar, SC and Mr. Rishabh Nangia, SC. CORAM: HON'BLE MR. JUSTICE YASHWANT VARMA HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV O R D E R % 10.01.2024 CM APPL. 1612/2024 (Exemption) Allowed, subject to all just exceptions. The application stands disposed of. ITA 29/2024 1. While considering the issue of capital gains and the liability that could have been placed upon the appellant in terms of Section 50B of the Income Tax Act, 1961, we find that the Assessing Authority had observed as under:- “2.3.1. Following points needs to be considered while arriving at sale consideration price of UNN Sugar Complex: a. As per Definitive Agreement for sale of M/ s UNN Sugar Complex the consideration for the transfer is (a) Rs. 75,50,00,000 /- ( Rupees Seventy Five Crores Fifty lacs This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 17/05/2024 at 12:26:54

only) and (b) the value of Net Current Assets on the transfer date as determined with Clause 6.3 of the agreement b. as per sub-ledger of Control GL: 5201 mentioned above, the consideration received for slump sale of M/s Unn Sugar Complex, is Rs. 155,30,55,105.94 which includes value of net current assets. c. Page 2, 10 & e-stamp purchased for conveyance deed, all show the consideration price for UNN Sugar Complex at Rs. 75,50,00,000/-. Moreover, page-23 of conveyance deed (scanned at Page-16 of this order) clearly mentions modalities of payments of the purchase consideration, wherein it is mentioned that payments have been made by way of D.D./RTGS on various dates for aggregate lump sum consideration of Rs. 75.50 Cr. d. Sub-Ledger Control GL: 5201 Sundary Creditors for 01.01.2014 to 31.03.2015, shows all the transactions undertaken by the assessee with M/ s Superior Food Grains P. Ltd, the purchaser of sugar complex, during F.Y. 2014- 15 relevant to A.Y 2015-16 Ledger entry dated 30.09.2014 bearing no 90243 is reproduced hereunder for ready reference “30/09/14 13/ 90243 HY AMT OF PROFIT OS SALE OF JINN SUGAR UNIT 491922400.94" The above entry shows that the assessee has itself computed the profit on sale of UNN Sugar Unit at Rs. 49,19,22,401/- but the same has not been, factored in by it while computing capital gain from sale of sugar unit.” 2. Our attention, however, has been drawn to page 326 of our electronic record and which would indicate a reversal of the entry of Rs. 49,19,22,400.94/- in the books of account of the assessee. According to learned counsel for the appellant, while this ground was duly pressed before the Income Tax Appellate Tribunal [“ITAT”], it has failed to either notice or consider the same. It is in the aforesaid backdrop that learned counsel makes a prayer for being accorded liberty to move the ITAT for the purposes of rectification. 3. In view of the aforesaid and while keeping all contentions of This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 17/05/2024 at 12:26:54

respective parties open, we dispose of the appeal at this stage with liberty as prayed for. YASHWANT VARMA, J. PURUSHAINDRA KUMAR KAURAV, J. JANUARY 10, 2024/ Neha/priya This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 17/05/2024 at 12:26:54

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