Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “B” BENCH: KOLKATA
Before: Shri A. T. Varkey, JM & Dr. A. L. Saini, AM]
1 ITA No.676/Kol/2016 Ambo Agro Products Ltd., AY 2009-10
IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH: KOLKATA [Before Shri A. T. Varkey, JM & Dr. A. L. Saini, AM]
I.T.A. No. 676/Kol/2016 Assessment Year: 2009-10
Ambo Agro Products Ltd. Vs. Pr. Commissioner of Income-tax, Kol- (PAN: AAECA5908Q) 3, Kolkata. Appellant Respondent
Date of Hearing 23.02.2017 Date of Pronouncement 19.05.2017 For the Appellant Shri Soumitra Chowdhury, Advocate For the Respondent Shri Niraj Kumar, CIT, DR
ORDER Per Shri A.T.Varkey, JM
This is an appeal filed by the assessee against the revision order of Ld. Pr.CIT- Kol-3, Kolkata dated 25.02.2015 for AY 2009-10. 2. The main grievance of the assessee is against the action of Ld. Pr. CIT in exercising his jurisdiction u/s. 263 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”). The brief facts of the case are that the assessee filed return of income reflecting a total income of Rs.4,81,69,267/-. Later the case was selected for scrutiny. The AO after issuing the statutory notice u/s. 143(2) and 142(1) of the Act and after hearing the Ld. AR of the assessee has passed the 143(3) order on 02.01.2014 u/s. 143(3) r.w.s. 144C(5) and 144C(13) of the Act, determining the total assessed income (long term capital gain) at Rs.30,98,86,270/-. Later on the Ld. Pr. CIT vide show cause notice dated 12.08.2015 u/s. 263 of the Act found fault on three issues, firstly the AO has not examined short term capital gain arising on the sale of various assets during the assessment proceedings; secondly, the AO has not obtained form 3CEA and has not examined the assessee’s claim regarding slump sale despite mentioning in the
2 ITA No.676/Kol/2016 Ambo Agro Products Ltd., AY 2009-10
assessment order; and thirdly, the AO has not examined whether assets added during the financial year qualified for benefit u/s. 50B of the Act. According to Ld. Pr. CIT, the aforesaid three issues have not been enquired into by the AO and, therefore, in his opinion make the order erroneous and prejudicial to the interest of revenue and he issued notice to the assessee conveying his intention to invoke revisional jurisdiction u/s. 263 of the Act. The assessee replied to the said notice of the Ld. Pr. CIT vide letter dated 09.09.2015 wherein the assessee had contended that the AO had examined the sale of edible oil manufacturing unit on slump sale basis which was subjected to tax u/s. 50B of the Act as long term capital gain because the said undertaking was held by the assessee for more than 36 months. It was pleaded before the Ld. CIT that the AO has passed the claim of the assessee after detailed enquiries, analysis and considering all facts and the AO has accepted the claim of the assessee in this respect. However, he brushed aside the objections raised by the assessee and held that the sale effected as per the Business Transaction Agreement (BTA) of its manufacturing unit of edible oil at Haldia was not a slump sale and, therefore, the provisions of sec. 50 are applicable to the sale of its undertaking and directed AO to pass consequential order. Aggrieved, the assessee is before us.
We note that section 263 of the Act enables supervisory jurisdiction to the CIT over the AO. The CIT is empowered to act u/s. 263 of the Act when he considers that AO’s order is erroneous in so far as it is prejudicial to the interest of Revenue. It is a settled position of law that the aforesaid twin condition i.e. AO’s order is erroneous and prejudicial to the interest of revenue is sine qua non for assumption of revisionary jurisdiction by CIT. As per the scheme of the Act, AO has a dual role to discharge while assessing the income of an assessee. He is both an investigator as well as an adjudicator. If the AO fails in discharging any of the two said duties i.e. as an investigator or that of an independent/impartial adjudicator, the CIT’s supervisory jurisdiction is attracted because the order of the AO would be erroneous for lack of inquiry, that is if he does not investigate or it would be erroneous for failure of AO to adjudicate as an independent/impartial adjudicator which means that if the AO passes assessment order in
3 ITA No.676/Kol/2016 Ambo Agro Products Ltd., AY 2009-10
violation of natural justice, or there is bias or arbitrariness etc. then also the order of AO would be erroneous. When we say that lack of inquiry makes an AO’s order erroneous, one has to keep in mind the difference between lack of inquiry and inadequate inquiry. Lack of inquiry makes the AO’s order erroneous, but inadequate inquiry does not make the order of AO erroneous. If the AO’s view is a plausible view on the facts and circumstances of the case, then CIT cannot exercise the 263 jurisdiction to impose his own view which may be a view possible to be taken in the very same facts of the case.
In the case of Malabar Industrial Co. Ltd vs. CIT 243 ITR 83 (SC) Hon'ble Supreme Court observed that the bare reading of Section 263 of the Act makes it clear that the prerequisite to the exervise of jurisdiction by the Commissioner suo-motto under this section is that the order of the A.O. is erroneous in so far as it is prejudicial to the interest of revenue.
Both these conditions have to be satisfied. If the order is not erroneous but prejudicial to the interest of revenue or erroneous but not prejudicial to revenue CIT cannot have recourse to section 263.
The provisions cannot be invoked to correct each and every type of mistake or error of the assessment order, it is only when the order is erroneous then the section can be attracted. Every loss of revenue as a consequence of an order of the assessment order cannot be treated as prejudicial to the interest of revenue. For example when in ITO adopted one of the course permissible in law and it has resulted in loss of revenue or where two views are possible and ITO has taken one view with which the CIT does not agree, it cannot be treated as erroneous order prejudicial to the interest of revenue unless the view taken by the ITO is not sustainable in law. 5. In the case of CIT Vs Green Wood Corporation reported in 314 ITR Pg 81(SC), Hon'ble Supreme Court observed that "An Order of Assessment passed by the Assessing Officer should not be interfered with only, because another view is possible,
4 ITA No.676/Kol/2016 Ambo Agro Products Ltd., AY 2009-10
CIT Vs Gabriel India Ltd (Bom) 263 ITR 108 - The Hon'ble High Court held that "the Income Tax Officer in the case had made enquiries in regard to the nature of the expenditure incurred by the assessee. The assessee had given a detailed explanation in that regard by a letter in writing. All these were part of the record of the case. Evidently, the claim was allowed by the Income Tax Officer on being satisfied with the explanation of the assessee. This decision of the Income Tax Officer could not be held to the "erroneous" simply because in his order he did not make an elaborate discussion in that regard. Moreover, in the instant case, the Commissioner himself, even after initiating proceedings for revision and hearing the assessee, could not say that the allowance of the claim of the assessee was erroneous and that the expenditure was not revenue expenditure but an expenditure of capital nature. He simply asked the income tax officer to re examine the matter. That was not permissible. The Tribunal was justified in setting aside the order passed by the Commissioner of Income Tax under Section 263".
In the light of the aforesaid judicial precedents in the present case what has to be seen is whether the AO has made enquiries about the transaction which the assessee termed as ‘slump sale’ of its only manufacturing edible oil unit at Haldia. If the answer is in the affirmative i.e. yes then the second question is whether the AO accepting the claim that the transaction was ‘slump sale’ is a plausible view or on the facts the said finding of AO can be termed to be unsustainable in law.
With the aforesaid question in mind we have to look into the evidence on record to see whether the AO has made enquiries about the transaction which the assessee has termed as ‘slump sale’ of its only manufacturing edible oil unit at Haldia and while examining this question, we will dispose of the three faults of non-examination of ‘slump sale’ alleged by CIT against the AO. We note that during the course of assessment proceedings, the AO called for various information’s relating to slump sale of its edible oil manufacturing unit and its taxability. Pursuant to the queries raised by the AO, the assessee had submitted details of the same from time to time which has been examined by the AO. In order to substantiate the aforesaid averment the Ld. AR drew
5 ITA No.676/Kol/2016 Ambo Agro Products Ltd., AY 2009-10
our attention to the notice dated 15.09.2011 wherein the AO has given show cause notice on slump sale as under: “Furnish the details of sales on non business and business assets as appeared from Schedule F to the balance sheet dated 31.03.2009 of your company along with the copy of the agreement for sale and also the conveyance deed. Further explain why the Capital Gain either Short Term or Long Term from those sales has not been discussed? If the same is truly under the slump sale then also furnish the copy of latest valuation of assets sold under the scheme.”
The assessee vide letter dated 18.10.2011 has replied that it had sold the business unit, to M/s. K. S. Oils Limited vide their Business Transfer Agreement dated 22nd November, 2008 (copy of BTA was enclosed and marked as Annexure A) as going concern. The assessee also enclosed the ‘Business Transfer Agreement’ in which all the details of assets as sold to K. S. Oils Limited was mentioned. This fact has been acknowledged by the Ld. CIT at page 18 of the impugned order and the copy of BTA was found by him from the assessment records.
Thereafter the Ld. AR of the assessee drew our attention to page no. 27 of the paper book which is the notice u/s. 142(1) of the Act dated 21.10.2011 issued by the AO wherein vide para (iv) has raised the following query: “Further your company has not paid any tax on Long/Short Term Capital Gain on account of Slump Sale of unit according to the period between acquiring of Assets and then sale. Explain with all supporting evidences to avoid from drawing any adverse inferences on this issue.”
The Ld. AR drew our attention to the reply of the assessee dated 09.11.2011 which is placed at page 28 of the paper book wherein the assessee has replied for the aforesaid query as under: “The Computation of Total income for the Assessment Year 2009-10 in respect of Slump Sale transaction and accountability of the same for the Computation of Long Term Capital Gains arriving thereon for Rs.75,61,39,754/- adjusted against the loss from Business of Rs.70,76,70,487/- vide page nos. 39 to 40.”
The Ld. AR drew our attention to page 32 of the paper book which is the reply of the assessee dated 21.11.2011 wherein the assessee has replied to the AO in respect to the said issue as under:
6 ITA No.676/Kol/2016 Ambo Agro Products Ltd., AY 2009-10
“Slump Sale: During the relevant previous year we had sold our unit at Haldia as a going concern to KS Oils Ltd. as per MOU dated 23.8.2008/Business Transfer Agreement dated 22.11.2008. We have already furnished before your honour copy of Business Transfer Agreement dated 22.11.2008. Copy of MOU dated 23.8.2008 is enclosed herewith (pages A.193 to A.219). We had only one manufacturing unit at Haldia and have transferred the same during the relevant previous year. The gain in such slump sale cases results into long term capital gains and the same has accordingly been considered by us in the computation of income.”
The Ld. AR also drew our attention to page 83 which is the draft assessment order passed by the AO dated 11.02.2013 wherein also at para 2 of the draft assessment order u/s. 143(3) r.w.s. 144C of the Act wherein it has been noted as under: “The assessee company has made slump sale it’s only manufacturing unit of edible oil situated at Haldia, Midnapore on 18.02.2009 to M/s. K. S. Oil Limited of Jiwaji Ganj. Morena (MP). The copy of MOU dated 23.08.2008 and Business Transfer Agreement (hereinafter called BTA) dated 22.11.2008 in respect of aforesaid slump sale, signed on 23.08,2008 by both seller and purchaser is placed on record. The sale proceed was fixed in consideration of Rs.125,00,00,000/- (Rupees One hundred twenty five crores only) and date of settlement (transfer of unit) was to be completed latest by 15.03.2009. the payment option was set vide clause 3 of MOU and clause 3.3 (relates to Advance Payment) and 3 (relates to Balance Payment) of BTA. The relevant portion of said clauses pertain to MOU as well as BTA is reproduced as follows:
“clause 3.3 OF Business Transfer Agreement deed – On the instructions of the Transferor (and the Confirming parties), the Transferee has paid the Advance Payment directly to the Transferor’s Fixed Deposit Account maintained with UCO Bank at Flagship Corporate Branch, 3, N. S. Road, Kolkata-700 001 (the UCO Bank) on simultaneous receipt of Bank Guarantee No. 1784IGFIN009408 dated 02 September 2008 by UCO Bank (Bank Guarantee) in favour of the Transferee, for an amount not less than the Advance Payment and on the terms set out in the Bank Guarantee.”
Thereafter, we note in draft assessment order, clause 3.3 of Business Transfer Agreement deed has been reproduced. We take note that the AO has discussed about the slump sale of the Haldia unit at several places in this draft assessment order which we find mentioned at 3.1, 3.2, 3.3 and para 8 has clearly mentioned as under: “As the assessee had transactions with its Associated Enterprises (AE), so the Audit Report in Form No. 3CEB was filed and reference has been made to the Transfer Pricing Officer to assess the Arms’s Length Price in respect of International Transactions with AEs.”
We also take note that the assessee after perusing the draft assessment order dated 11.02.2013 filed rectification application dated 12.03.2013, wherein it was pointed out
7 ITA No.676/Kol/2016 Ambo Agro Products Ltd., AY 2009-10
that the slump sale of fixed unit attracts only long term capital gains @ 20% and not 30% as computed by the AO. The Ld. AR thereafter took our attention to page no. 35 of the paper book, which is the order passed by the AO dated 10.04.2013 wherein the AO after realizing that income on account of slump sale offered under the head long term capital gain has to be taxed @ 20% and the mistake of charging tax @ 30% was duly rectified by the AO. After all these processes only the final assessment order dated 07.01.2014 was passed by the AO wherein also we note that the AO has taken note of the slump sale of its only manufacturing unit edible oil at Haldia was recorded by the AO as under: “During the year under consideration the assessee company had sold/transferred it’s only manufacturing unit situated at Haldia, Midnapore on 18.02.2009 through slump sale to M/s. K. S. Oil Limited, having it’s registered office at Jiwaji Ganj, Morena (MP), M/s. K. S. Oil Ltd. was one of the suppliers of the raw materials to the assessee company. The copy of the Business Transfer Agreement (hereinafter called BTA) dated 22.11.2008 for the said slump sale is obtained and placed in the record. An MOU was signed by both parties on 23.08.2008 in connection with this transfer or slump sale disclosing total sale consideration of Rs.125,00,00,000/- (Rupees one Hundred Twenty Five Crores only) received/receivable by the assessee. According to the said MOU, the settlement/transfer was to be completed latest by 15.03.2009. The payment option was set to the buyer (M/s. K. S. Oil Limited) vide clause 3.3 (relates to Advance Payment) and 3 (relates to Balance payment) of BTA. The relevant portion of said clauses of BTA.”
We note that in the final assessment order also the AO has taken note of the fact of slump sale in para 2.3 and 2.4. Thus we note that the AO has examined the aspect of sale of its only manufacturing unit situate at Haldia and, therefore, we do not find any merit in the CIT finding fault on the issue that the AO has not examined short term capital gains arising on the sale of various associates during the assessment proceedings. We note from the notices issued by the AO and reply of the assessee and Form 3CEA clearly spells out the details of the slump sale agreement between the assessee and M/s. K. S. Oil Ltd. The MOU and BTA regarding slump sale has been taken note of by the AO and discussed in the draft assessment order and thereafter in the rectification application as well as in the final assessment order. Therefore, the first fault noted by the Ld. CIT has no legs to stand and has to fail.
8 ITA No.676/Kol/2016 Ambo Agro Products Ltd., AY 2009-10
Coming to the second fault which has been raised by the Ld. CIT that the AO has not obtained form 3CEA and has not examined the assessee’s claim regarding slump sale despite mentioning in the assessment order, we note that the aforesaid view of the Ld. CIT does not have any merits at all and has to fail for the simple reason that in the draft assessment order of the AO placed at pages 83 to 90 clearly shows that the form 3CEA had been filed before the AO and the AO has clearly taken note of the said fact at page 8 para 8 of his draft assessment order as below: “As the assessee had transactions with its Associated Enterprises (AE), so the Audit Report in Form No. 3CEB was filed and reference has been made to the Transfer Pricing Officer to assess the Arm’s Length Price in respect of International Transactions with AEs.”
Thus, we note that Form 3CEA has been filed by the assessee before the AO which fact had been acknowledged by the AO as aforestated and the assessee before us also has placed at page 29 of the paper book form 3CEA which is the report of the accountant furnished by the assessee as per sub-section 3 of section 50B of the Act, which is relating to computation of capital gains in case of slump sale. We note that the certificate of Chartered Accountant in the form 3CEA was obtained by the assessee and the said fact was mentioned so in the computation of income and was attached along with it. It was pointed out before us that the slump sale related statement and disclosure was made in almost in all documents, i.e. audit report, tax audit report, financial statement, schedule, computation of income and the AO has examined the slump sale under the provisions of law and as we have taken note (supra) the AO have raised queries which were explained and the AO required details of the slump sale, and the assessee had furnished the documents before the AO and thereafter only the AO has passed the assessment order allowing the claim of the assessee in respect to the slump sale LTCG u/s. 50B of the Act. The Ld. AR drew our attention to the annexure to audit report wherein the auditors have mentioned in part 1C as under: “During the year, the company has disposed of its manufacturing division on slump sale basis.”
9 ITA No.676/Kol/2016 Ambo Agro Products Ltd., AY 2009-10
Thereafter, he drew our attention to financial statements annexure H wherein on the basis of the P&L account it has stated “income from sale of edible oil unit is appearing as a separate item”. Similarly, in cash flow statement “income from sale of edible oil unit is appearing at separate line of item”. The Ld. AR drew our attention to Schedule F of fixed asset by way of note it is disclosed that disposal of fixed assets includes transfer on slump sale at cost Rs.61,02,67,259.95 and depreciation thereof Rs.5,41,56,001.40. Thereafter, the Ld. AR drew our attention to notes on account which is placed at annexure I wherein note 1 of schedule Z reads as under: “On 17th February, 2009 the company has transferred by way of sale its manufacturing division at Haldia (Edible Oil Unit) on Slump Sale basis, for which the shareholders approval was taken under section 293(1)(a) of the Companies Act, 1956”
The Ld. AR drew our attention to the facts of computation of total income annexure J wherein the computation of total income under the head “capital gain on slump sale on edible oil unit is disclosed separately”.” In the form 3CEA and computation of income of slump sale u/s. 50B, the certificate clearly mentioned that net worth of cost of unit as on 18.02.2009 separately attached and all the details related to computation of long term capital gain on account of slump sale was placed by the assessee on the records of the AO. It was brought to our notice that the computation of LTCG on slump sale is done/reproduced in the computation of total income and return of income on the basis of certificate of CA in form No. 3CEA.
As we have noted earlier, the AO had issued notice to the assessee enquiring about slump sale of its unit at Haldia on 15.09.2011, and pursuant to the said notice assessee filed the Business Transfer Agreement dated 22.11.2008. Thereafter, the AO issued notices again asking queries about the slump sale on 21.10.2011 and the assessee replied to it vide reply dated 09.11.2011 and 21.11.2011. We note that in the draft assessment order dated 11.02.2013 the fact of sale of slump sale of the manufacturing unit situate at Haldia has clearly mentioned by the AO and in the rectification order u/s. 154 that too specifically regarding computation of LTCG of the slump sale of Haldia Unit was the only issue which was brought to the knowledge of the AO, who accepted
10 ITA No.676/Kol/2016 Ambo Agro Products Ltd., AY 2009-10
the mistake which was apparent on the face of record and rectified the same and also the fact of slump sale figures as well as in the final assessment order dated 07.01.2014 wherein also the AO has discussed the fact relating to sale of manufacturing unit of the assessee as a going concern on slump sale and computed the long term capital gain u/s. 50B of the Act and charged tax at long term capital gain @ 20% and thus, the second fault pointed out by the Ld. CIT that Form 3CEA was not filed by the assessee also fails on the face of it when the AO himself has acknowledged the filing of Form 3CEA as extracted by us at para 14 (supra). So, this fault noted by Ld. CIT also fails.
To sum it up, we note that from the notice issued by AO dated 15.09.2011 and 21.01.2011 u/s. 142(1) and replies furnished by the assessee (supra) and the fact that assessee has filed 3CEA report, audited financials, MOU and slump sale agreement before the AO and the said fact has been mentioned at various places of draft assessment order dated 31.03.2013 fortifies the fact of inquiry by the AO regarding slump sale of its only manufacturing edible oil unit at Haldia to M/s. K. S. Oil Ltd. So, the order of AO cannot be termed as erroneous on the ground that the AO did not enquire about the claim of the assessee that it had transacted with M/s. K. S. Oil Ltd. the slump sale of its manufacturing unit at Haldia.
Coming to the third issue on which the Ld. CIT exercised his revisionary powers wherein he found fault with the AO for not examining whether the assets added during the financial year qualified for benefit u/s. 50B of the Act as well as whether the view of the AO in accepting the claim of assessee is unsustainable in law or not?
24 According to the assessee, since the undertaking which was sold for lump sum amount was owned and held by it for more than 36 months, the Long Term Capital Gain are taxable @ 20% as per section 50B of the Act, which stipulate the mechanism for computing capital gains in case of slump sale of going concern. The profits or gains arising from slump sale are chargeable under the head capital gains. It provides for mechanism to compute ‘Net Worth’. The benefit of indexation is not available in the
11 ITA No.676/Kol/2016 Ambo Agro Products Ltd., AY 2009-10
case of slump sale and the profit or gain on slump sale regarded as long term or short term depending upon the period of holding of the undertaking being transferred. So, once it is established that a transaction is slump sale, the income arising from such sale will be taxed under this section. The undertaking was set up in 2005 and commercial production of the undertaking started from 06.02.2006. According to assessee, since the undertaking was owned and held by the assessee for more than 36 months and sold as a whole and not as individual assets, the sale of the undertaking as a going concern is slump sale and therefore , according to assessee, the special provision for the computation of capital gain in the case of slump sale has to be made u/s. 50B of the Act and so, the assessee has filed the statutorily required Form 3CEA as per rule 6H which is the report of the accountant as required by sub-section 3 of sec. 50B of the Act, which is relating to computation of capital gain in case of slump sale.
We note that section 50B was inserted in the Act vide the Finance Act, 1999 w.e.f. 1st April, 2000, in view of the judicial decisions that ‘slump sale’ were not taxable under the capital gain provisions because it was not possible to compute cost of acquisition, it was held that when computation cannot be made in the absence of cost of acquisition, then the charging section itself would not be applicable.( refer PNB Finance Ltd v CIT 307 ITR 75 (SC)
26 ‘Slump sale’, as then understood, meant transfer of business as a going concern, and therefore, it was not possible to determine the actual cost namely the cost of acquisition even though, in a given case, it might be a generated asset ( refer CIT v Artex Manufacturing Co 227 ITR 260 (SC). In such cases, it was not possible to break up and compute capital gains on the assets sold, either individually or in entirety.
To examine the third issue as aforestated, let us look into the relevant provisions of the Act. Section. 50B Special provision for computation of capital gains in case of slump sale
12 ITA No.676/Kol/2016 Ambo Agro Products Ltd., AY 2009-10
1) Any profits or gains arising from the slump sale effected in the previous year shall be chargeable to income-tax as capital gains arising from the transfer of long-term capital assets and shall be deemed to be the income of the previous year in which the transfer took place; Provided that any profits or gains arising from the transfer under the slump sale of' any capital asset being one or more undertakings owned and held by an assessee for not more that thirty-six months immediately preceding the date of its transfer shall be deemed to be the capital gains arising from the transfer of short-term capital assets. 2) In relation to capital assets being an undertaking or division transferred by way of such sale, the "net worth" of the undertaking or the division, as the case may be, shall be deemed to be the cost of acquisition and the cost of improvement for the purposes of sections 48 and 49 and no regard shall be given to the provisions contained in the second proviso to section 48. 3) Every assessee, in the case of slump sale, shall furnish in the prescribed form along with the return of income, a report of an accountant as defined in the Explanation below sub-section (2) of section 88, indicating the computation of the net worth of the undertaking or division, as the case may be, and certifying that the net worth of the undertaking or division, as the case may be, has been correctly arrived at in accordance with the provisions of this section. Explanation 1. - For the purposes of this section, "net worth" shall be the aggregate value of total assets of the undertaking or division as reduced by the value of liabilities of such undertaking or division as appearing in its books of account: Provided that any change in the value of assets on account of revaluation of assets shall be ignored for the purposes of computing the net worth. Explanation 2. For computing the net worth, the aggregate value of total assets shall be, (a) in the case of depreciable assets, the written down value of the block of assets determined in accordance with the provisions contained in sub-item (C) of item (i) of sub-clause (c) of clause (6) of Section 43;
13 ITA No.676/Kol/2016 Ambo Agro Products Ltd., AY 2009-10
(b) in the case of capital assets in respect of which the whole of the expenditure has been allowed or is allowable as a deduction under section 35AD, Nil; and (c) in the case of other assets I the book value of such assets. Section 2 (42C) defines Slump Sale as under: "slump sale" means the transfer of one or more undertakings as a result of the sale for a lump sum consideration without values being assigned to the individual assets and liabilities in such sales. Explanation 1.- For the purposes of this clause, "undertaking" shall have the meaning assigned to it in Explanation 1 to clause (19AA). Explanation 2. - For the removal of doubts, it is hereby declared that the determination of the Value of an asset or liability for the sole purpose of payment of stamp duty, registration fees or other similar taxes or fees shall not be regarded as assignment of values to individual assets or liabilities; Explanation 1 to Section 2(19AA) “For the purposes of this clause, “undertaking” shall include any part of an undertaking, or a unit or division of an undertaking or a business activity taken as a whole, but does not include individual assets or liabilities or any combination thereof not constituting a business activity.”
The definition of slump sale’ u/s. 2(42C) read with explanation (1) to sec. 2(19AA) of the Act makes it clear that ‘slump sale’ means transfer of one or more undertakings as a result of sale for a lump sum consideration without values being assigned to the individual assets and liabilities in such sale. For the purpose of this section, undertaking as defined in explanation (1) to sec. 2(19AA) of the Act includes any part of an undertaking, or a unit or division of an undertaking or a business activity taken as a whole, but does not include individual assets or liabilities or any combination thereof not constituting a business activity. Combined reading of all the three sections reveal that section 50B of the Act is code in itself and contains both charging and computation provision of capital gains in the case of a ‘slump sale’, though sale of business undertaking as a going concern involves sale of assets forming block of assets on which depreciation is allowed. There is difference in the mode of computation of
14 ITA No.676/Kol/2016 Ambo Agro Products Ltd., AY 2009-10
capital gains for a ‘slump sale’ u/s. 50B of the Act. In the case of slump sale, the net worth has to be computed in terms of explanation 1 to section 50B and it is a special provision for computation of capital gains and it will override the other general provisions and so in this case if slump sale happened then computation has to be done as per section 50B of the Act. As per section 50B, deduction is not allowed in respect of cost of acquisition of each individual capital asset of the undertaking, but the net worth of the undertaking as a whole which is determined in the prescribed manner is allowed as a deduction treating it to be the statutory cost of acquisition. Precisely for this reason irrespective of the period for which individual asset is held by the transferor, no benefit of index cost is allowed but deduction is allowed only in respect of net worth of the undertaking as a whole on the date of transfer. Gain on slump sale of undertaking is taxable as "Long Term Capital Gain" or “Short Term Capital Gain” as per sec. 50B(1) of the Act. The proviso further clarify that if the undertaking is owned and held for less than 3 years the capital gain arising from it are chargeable to tax as short term capital gain and so, if the undertaking is owned and held for more than 3 years, the capital gains arising from it would be chargeable to tax as Long term capital gain.
The Hon’ble Delhi High Court in SREI Infrastructure Finance Ltd. Vs. Income-tax Settlement Commission ( w.p no 1592/2012)has observed in respect to slump sale as under: “11. The term 'slump sale', which has now been specifically defined in Section 2(42C) of the Act means transfer of one or more undertakings as a result of sale for a lump sum consideration without values being assigned to the individual assets and liabilities in such sales. The use of the word 'transfer' in said section is significant. The term 'transfer' is used in said section is with reference to the transaction in the nature of 'slump sale'. Thus any type of "transfer" which is in nature of slump sale i.e. when lump sum consideration is paid without values being assigned to individual assets and liabilities are covered by the definition clause 2(42C) and then by Section 50B of the Act. This is the reasonable, plausible and natural grammatical meaning which has to be given to the definition clause 'slump sale'. It is not correct to construe and regard the word 'slump sale' to mean that it applies to 'sale' in a narrow sense and as an antithesis to the word 'transfer' as used in Section 2(47) of the Act. The intention of the legislature was to plug in the gap and tax slump sales and not to leave them out of the tax net. The term 'slump sale' has been used in the enactment to describe a particular and specific type of transfers called slump sales. Use of word 'sale' in the term 'slump sale' does not and is not intended to narrow down the concept of 'transfer' as defined and understood in Section 2(47) of the Act. All transfers in nature of 'sales' i.e. 'slum sales' are covered by the definition clause 2 (42C) of the Act. The word 'transfer' as defined and understood in Section 2(47) of the Act is
15 ITA No.676/Kol/2016 Ambo Agro Products Ltd., AY 2009-10
wide. It is an inclusive definition of wide import, It includes sale, exchange or relinquishment. extinguishment of any right in an asset. compulsory acquisition under the law etc. We may note and record here that the learned Senior Advocate appearing for the petitioner did not contest and submit that the transaction in question is not covered by the word 'transfer' as defined in Section 2(47) and the contention raised was that Section 50B read with Section 2(42C) is only applicable to "sale" in a narrow sense and not to 'transfer' under Section 2(47) of the Act.
The term 'slump sale’ been defined to mean a transfer of a business undertaking or a business for a lumpsum consideration with all its assets and liabilities without values being assigned to individual assets/liabilities. The said term has no other Significance and we should not read into and understand that the word 'sale used in the term 'slump sale', as a cause/reason to give a restrictive meaning to ·slump sale", i.e. it can only apply to “sales" in a narrow sense and not to "transfers" under Section 2(47). This is apparent as when we read the proviso and sub-section (1) to Section 50B together and in a harmonious way, it is clear that it applies to all types of "transfers" that can be categorized as a "slump sale". Sub-section (2) to Section 50B of also refers to transfer of an undertaking or division by way of sale i.e. ‘slump sale' and prescribes the mode of computing and calculating capital gains on such transactions.”
Now let us examine the MOU and the BTA entered into by the assessee and buyer M/s. K. S. Oil and reproduce the important recitals from them to have better understanding: Recital of “Transfer Price” in Memorandum of Understanding dated 23.08.2008 is reproduced as under: “Transfer Price: shall mean a lump sum consideration Rs.1,25,00,00,000/- (Rupees one hundred and twenty five crores only) , subject to certain adjustments as set out in clause 3.2”
Recital of “Transfer Price” in Business Transfer Agreement dated 22.11.2008 is reproduced as under: “Transfer Price: shall mean a total lump sum consideration Rs.1,25,00,00,000/- (Rupees one hundred and twenty five crores only),payable in accordance with Clause 3.2.”
Clause of “Transfer and Assumption” in Business Transfer Agreement dated 22.11.2008 is reproduced as under: 2. Transfer and Assumption 2.1. Agreement to Transfer. In consideration of the Transfer Price and subject to the satisfaction of the terms and conditions of the Agreement including the condition precedents under Clause 3.4 hereof, the Transferor shall, on the Closing Date, transfer, grant, sell, convey, assign and deliver as a going concern to the
16 ITA No.676/Kol/2016 Ambo Agro Products Ltd., AY 2009-10
Transferee, and the Transferee shall accept, purchase and acquire as a going concern from the Transferor, all of the Transferor's rights, title and interest in and to the Business undertaking free and clear of any encumbrances, except Excluded Assets.
2.2 Assets. For the purposes of this Agreement, the "Assets" that are to be transferred and/or assigned (and to the extent that any of the Assets are not transferable or assignable, to ensure for the Transferee's continuous, uninterrupted use or the right to use) to the Transferee are all items existing as shown in the balance sheet of the Transferor for the financial year 2007-08 and those acquired thereafter and through the Closing Date that are held or utilised by the Transferor solely and exclusively in connection with the Business Undertaking, subject to the changes in the ordinary course of business consistent with the past practice except Excluded Assets. The Assets relating to the Business Undertaking which are being sold, conveyed, transferred, assigned and granted shall include all such assets as set out in Schedule II.
2.3 Excluded Assets. For the avoidance of doubt, it is clarified that notwithstanding anything to the contrary set forth in Clause 2.2, the Excluded Assets means such assets, which are not relating to the Business Undertaking and hence are not included in the sale of the Business Undertaking and shall not be sold, conveyed, transferred, assigned or delivered to the Transferee by virtue of this Agreement or otherwise:
2.3.1 the names and any variations of those names, and any logos, and trademarks and trade names which is used by the Transferor or any of its Affiliates and group companies;
2.3.2 corporate minute and other statutory books, corporate seals and accounting and tax records of the Transferor;
17 ITA No.676/Kol/2016 Ambo Agro Products Ltd., AY 2009-10
2.3.3. VAT Benefits accruing on the Business Undertaking upto 31 March 2008 subject to Clause 3.5; and
2.3.4. all assets kept, fixed installed or otherwise being used at the registered office of the Transferor and the Jar manufacturing unit on rent (which is not a part of fixed assets) and such other assets added to the list of Excluded Assets as set out in Schedule IV.
2.4. Assumed Liabilities. In consideration of this Agreement, the Transferee shall assume certain liabilities with effect from closing Date. For the purpose of this Agreement, the Assumed Liabilities shall mean:
2.4.1. the Assumed Debts, relating to the Business Undertaking, which shall be updated by the as of the Closing Date;
2.4.2. those arising out of the contracts and consents referred to in sub-clauses (d) and (f) of Schedule II, to be transferred to the Transferee, the conduct of the Business Undertaking and ownership and use thereof with immediate effect from the Closing Date, but not those having their origin prior to the Closing Date (except gratuity);
2.4.3. all obligations with respect to company Personnel and Personnel Plans arising out of or relating to their employment in connection with the Business Undertaking commencing with immediate effect from the Closing Date, but not those having their origin prior to the Closing Date; and
2.4.4. all future debts, liabilities, covenants, agreements or other obligations, incurred or arising after the Closing Date in relation to the Business Undertaking.
18 ITA No.676/Kol/2016 Ambo Agro Products Ltd., AY 2009-10
2.5. Retained Liabilities: For the avoidance of doubt, all liabilities and obligations (whether fixed, contingent, known or unknown) of the Transferor that are not relating to the Business Undertaking and are not specifically assumed by the Transferee under Clause 2.4 above shall remain with the Transferor, all such liabilities and obligations being collectively referred to herein as the Retained Liabilities. The Transferor alone shall be responsible for all such Retained Liabilities, including, all liabilities arising out of or relating to the ownership, operation, occupancy and conduct of the Business Undertaking upto the Closing Date.
Consideration
3.1 Payment Terms. The total consideration for sale and transfer of the Business Undertaking, as a going concern, on slump sale basis, by the Transferor to the Transferee shall be the Transfer Price payable in the manner set out in Clause 3.2.
Schedule II of Business Transfer Agreement dated 22.11.2008 is reproduced as under: SCHEDULE II “The Assets forming part of the Business Undertaking shall include: (a) All fixed assets (moveable and immovable, real personal or fixed, tangible or intangible) and improvements thereto, including, the Freehold Property, if any, used solely and exclusively, in connection with the Business Undertaking; (b) All rights and interest in the Leasehold Properties along with Buildings and structures relating to the Business Undertaking; (c) All Inventories, Trade Receivables, loans and advances and other current assets, relating to the Business Undertaking, a summary list of which, shall be updated by the Transferor on the Closing Date;
19 ITA No.676/Kol/2016 Ambo Agro Products Ltd., AY 2009-10
(d) All rights, claims and obligations other than termination compensation payable under all contracts, agreements and legally binding commitments having the Transferor as a party and existing solely and exclusively in relation to the Business Undertaking; (e) All rights, title and interest to claims and causes of action to the extent they are transferable, arisen or that may arise in favour of the Transferor in relation to the Business Undertaking up to the Closing Date; (f) All consents, licenses, permits, registrations and approvals from, and filings of all reports, registrations and notifications, with any Government Authority having jurisdiction over the Business Undertaking necessary or useful in any jurisdiction for the effective ownership, operation and use of the Business Undertaking, including, right to acquire rights or interests in future in any property in relation to the Business Undertaking; (g) Grant of various licences in relation to the Business Undertaking; (h) The Boiler Plant; (i) 100 MT Hydrogenation unit; (j) Fractionation Plant; k) Warehouse; (I) Transfer of partly assembled Vanaspati Plant as set out in Annexure B; (m) all VAT benefits accruing to the Business Undertaking on or after April 1,2008; (n) Company Personnel; (o) List of Fixed Assets as per Annexure A; Schedule IV of Business Transfer Agreement dated 22.11.2008 is reproduced as under: SCHEDULE IV
20 ITA No.676/Kol/2016 Ambo Agro Products Ltd., AY 2009-10
List of Excluded Assets HEAD OFFICE OFFICE EQUIPMENTS QTY. FAX MACHINE 2 SCANNER 2 AQUAGUARD 1 ELECTRONIC ATT RECORDER 1 COMPUTER & UPS 28 XEROS CUM PRINTER 1
FURNITURE & FIXTURES TABLE 11 CHAIR 61 AC 12 MAIN DOOR GLASS 1
MOTOR VEHICLES SANTRO CAR 1 SANTRO CAR 1 TRAVERA CAR 1
31 In commercial world transactions have to be seen and considered in its totality. A close analysis of the MOU and BTA entered into by the assessee with M/s. K. S. Oil leaves no doubt that the business of manufacturing edible oil at Haldia as a whole was sold at a lump sum consideration and it was not an itemised sale of assets. We note that the transfer price (lump sum amount) agreed upon in the MOU dated 23.08.2008 was Rs.125 cr. and the transfer price as per the business transaction agreement dated 22.11.2008 was also the same amount. As per the BTA clause 2.1 the assessee (transferor) shall on the closing date, transfer, grant, sell, convey, assign and deliver as a going concern to the transferor (M/s. K. S. Oils) and the transferee shall accept purchase and acquire as a going concern from the transferor or of the transferor’s rights, title and interest in and to the business undertaking free and clear of any encumbrances. As per BTA clause 2..2, the assets that has been transferred s per ‘slump sale’ for lump sum amount of Rs. 125 cr. are all items existing as shown in the balance sheet of the
21 ITA No.676/Kol/2016 Ambo Agro Products Ltd., AY 2009-10
transferor (assessee) for the FY 2007-08 and those acquired thereafter and which are held on the closing date and utilised by the transferor solely and exclusively in connection with the business undertaking which has been given in schedule II (supra). From a perusal of the Schedule II we note that all the fixed assets i.e. movable and immovable, tangible and intangible including the freehold property solely and exclusively in connection with the business undertaking have been included in the assets forming part of the business undertaking. All rights and interest in the leasehold properties along with building and structures relating to the business undertaking has been included as asset for transfer. All inventories, trade receivable, loans and advances and other current assets relating to the undertaking as on the closing date has been also included in the assets forming part of the business undertaking which was transferred. Thereafter the schedule II has given the list of assets which can be seen from a perusal of the same. We note that as per clause 2.4 the transferee has assumed certain liabilities with effect from the closing date and assumed liabilities mean assumed debts, relating to the business undertaking and which are given in clause 2.4.2, up to 2.4.4 where all future debts liabilities covenants agreements or other obligations incurred or arising after the closing date in relation to the business undertaking are included in the assumed liabilities of the transferee M/s. K. S. Oils. Clause 3 says about the payment of consideration and the recitals of MOU and BTA leaves no doubt in our mind that the business as a whole of its manufacturing unit of edible oil at Haldia was sold at a lump sum price and not an itemised sale of assets.
We note that the CIT has made certain observations to state that the BTA is not a slump sale but an itemised sale. For that he refers to note no. 10 para B of ‘Notes on Accounts’ of schedule 2 annexed to and forming part of the accounts for year ended 31.3.2009 of the audited accounts wherein it has been mentioned as under: “During the year, the company was mainly engaged in refining of edible oil in India. All activities of the company revolved around this main business. As such, there is no separate reportable segment as per accounting standard on segment reporting (AS 17).”
22 ITA No.676/Kol/2016 Ambo Agro Products Ltd., AY 2009-10
Thereafter the CIT notes that again in para (i)(c) of annexure referred to in para (3) of the auditors’ report to the members of the assessee company it has been mentioned as under: “During the year the company has disposed off its manufacturing division on slump sale basis. Accordingly, substantial part of its plant and machinery were disposed off. Based on the information and explanation given by the management and on the basis of audit procedure preferred by us, we are of the opinion that the sale of the said part of plant and machinery has not affected the going concern status of the company.”
Taking note of the above two observations of the auditor, the CIT observed as under: “As pointed out above, it has been mentioned that there is no separate reportable segment and the sale of the part of plant and machinery has not affected the going concern status of the company. Thus as per the report of the auditors, there was solitary segment of business and the activities of the company revolved around this business. At the same time, the auditors found that sale of plant and machinery had not affected the going concern status of the company. As there was only one segment of the business of the assessee and the how the assessee retained its status as a going concern subsequent to the impugned sale, necessarily follows that sale of the said part of the plant and machinery was not as a going concern. It has been held by Hon’ble ITAT, Mumbai Bench in Premiere Automobiles Ltd… 84 ITD 169 (Mum) ™ where the assessee did not sale the business as a going concern it cannot be said that the case of the assessee would fit in the parameters of concept of slump sale.”
We do not subscribe to the aforesaid view of the Ld. CIT because a careful reading of the ‘Notes on Account’ revealed that the assessee was mainly engaged in refining of edible oil in India and that this was the main business. The auditor’s statement that there was no separate reportable segment as per the AS 17 simply means that according to the auditors other activities from where the assessee earns income is not significant and the other activities like trading etc. does not constitute the core segment which needs to be reported as per AS 17. It should be taken note that it is the view of the auditor and cannot alter the character of the transaction which the assessee has carried out as per the MOU and BTA; and if the auditor omits to report a segment cannot be used against the assessee to draw adverse inferences against it. Moreover, we note that the second observation of the auditor confirms that the main business of manufacturing division has been sold on slump sale basis. The observation of the auditor that they are of the opinion that the said sale of the manufacturing unit has not
23 ITA No.676/Kol/2016 Ambo Agro Products Ltd., AY 2009-10
affected the going concerns status of the company which means that the assessee’s status after the sale continues to be a going concern makes no difference. The auditor simply says that the undertaking which has been sold to M/s. K. S. Oils has not affected the going concern status of the assessee which is correct because the case of the assessee is that it has sold its undertaking which manufactures edible oil as a going concern to M/s. K. S. Oils. And by selling the said undertaking the assessee as a company which is a legal entity survives (not dissolved) and its other activities are not affected and so it is a going concern. The inferences drawn by the Ld. CIT from the observations of the auditor are therefore, erroneous. Moreover, we note that the Ld. CIT has relied on the order of the Tribunal in Premier Automobile Ltd. (Supra), which has been set aside by the Hon’ble High Court and the claim of the assessee in that case wherein it has claimed to have sold its Kurla Unit on slump sale was accepted by the Hon’ble High Court of Bombay Premier Automobiles Ltd. Vs. ITO 264 ITR 193 (Bom) and, therefore, the order relied by the Ld. CIT is not a good law.
The Ld. CIT was of the view that certain liabilities and obligations of the transferor (assessee) has not been transferred and refers to para 2.5 of BTA. We do not subscribe to the CIT’s view. A perusal of clause 2.5 reveals that liabilities and obligations which are retained by the assessee which are not related to the business undertaking. Of course, the liabilities and obligations which are not related to the undertaking which was not transferred cannot be transferred to M/s. K. S. Oils. Nothing turns around on the observation of the Ld. CIT in this regard. The Ld. CIT finds fault with the BTA wherein schedule II shows the assets sold, conveyed, transferred, assigned and granted to the transferee (K. S. Oils) and taking note of the excluded assets (supra) the Ld. CIT was of the opinion that the exclusion of the assets and liabilities clearly establishes that sale is not a slump sale and relies on the Tribunal’s decision in Premier Automobiles Ltd. We do not subscribe to the said view of the Ld. CIT for the simple reason that a perusal of the Schedule which are the assets included in the business undertaking which was transferred for slump sale which has been reproduced above shows that all fixed assets moveable and immovable, tangible and intangible, leased
24 ITA No.676/Kol/2016 Ambo Agro Products Ltd., AY 2009-10
properties along with building and structures, all inventories, trade receivable and other current assets, plants, hydrogenation unit, fractional plant, warehouse partly assembled vanaspati plant, company personnel etc. have been transferred. All the rights, title and interest to claims causes of action, to the extent they are transferable, arisen or that may arise in favour of the transferor in relation to the business undertaking upto the closing date are also included in the assets forming part of the business undertaking. The objection raised by the Ld. CIT in respect to clause (d) is also erroneous for the simple reason that the rights claims and obligations which are flowing from legally binding commitments wherein transferor (assessee) as a party cannot be transferred to the transferee K. S. Oils. Other than that, all rights, claims and obligations have been transferred to K. S. Oils. Therefore, we do not find any merit in the observations made by the Ld. CIT in this regard. The other objections of the Ld. CIT is that the condition precedent for confirmation of the transaction is the installation, operation and commission of boiler plant, vanaspati plant and fractionation plant, warehouse and refers to para 4.1 to 4.5 of BTA and was of the opinion that these are new plants and was not a part of the business undertaking since, according to him, it has never been utilised for the business of the business undertaking and therefore, cannot form part of the going concern and so, it is not within the confines of slump sale. We do not find any merit in the said observation of the Ld. CIT because the department should not tell how the businessman to do his business. It is for the businessman to decide what he has to do in his manufacturing unit at Haldia. Likewise, the buyer (K. S. Oils) have to decide what to purchase from the assessee for the lump sum amount given to it. If the assessee has expanded its business in the very same undertaking (unit) then it has to sell all the items which is in the said undertaking. That is exactly what took place. The assessee has sold the entire undertaking wherein it had started expansion projects also as a going concern to K. S. Oils. We do not find any merit in the observation of the Ld. CIT in this regard and the said observation in no way affect the character of slump sale transaction of the entire undertaking at Haldia for a lump sum amount.
25 ITA No.676/Kol/2016 Ambo Agro Products Ltd., AY 2009-10
34 The Ld. CIT observes that in the excluded items the name/trade name/logs/trade mark was excluded. Therefore, it is not a slump sale. Again we do not subscribe to the said view of the Ld. CIT for the simple reason that M/s. K. S. Oils the purchaser of the manufacturing unit of the edible oil was already in the same business and wanted to sell the products manufactured from Halida unit after the closing date in their own name and brand and so they were not keen to buy the name/trade name/logos/trade mark/ product name etc. of the assessee, so, the assessee excluded the same from the transaction. So, therefore, exclusion of the said intangibles cannot in any way affect the slump sale of the manufacturing unit as a going concern in the facts and circumstance of this case. We note that the assessee has sold its business undertaking as a going concern on slump sale basis on 18.02.2009, the entire assets of the business undertaking of manufacture of edible oil at Haldia was sold for a lump sum consideration, so the assessee’s claim is that it sold its undertaking as slump sale which the AO accepted after enquiry is a plausible view.
We note that the Ld. CIT has given heavy reliance to the Tribunal decision in Premier Automobiles Ltd. 84 ITR 169 (Mum) (TM) in which case the Tribunal after analysing the agreement between the parties did not agree with the assessee (Premier Automobiles Ltd.) in respect to their claim that its sale of Kurla Unit was slump sale and held against the assessee. However, we note that the said order of the Tribunal was set aside by the Hon’ble High Court of Bombay in Premier Automobiles Ltd. Vs. ITO 264 ITR 193 (Bom) and the claim of the assessee that its sale of Kurla Unit as ‘slump sale’ was accepted. In the present case before us, we note that the Ld. CIT has relied on the Tribunal order in Premier Automobiles Ltd. (supra) to find fault with the decision of the AO accepting the claim of the assessee after taking note of a few clauses of the agreement of slump sale. The Ld. CIT erred in viewing certain clauses of the contract in isolation. In order to ascertain the intention of the assessee and the buyer one has to read the contract as a whole and the intention between the parties has to be seen from the view point of the Businessman who were parties to the contract. A reading of the MOU and the contract as a whole gives the picture of the intention of the assessee to sell its
26 ITA No.676/Kol/2016 Ambo Agro Products Ltd., AY 2009-10
only manufacturing unit of edible oil at Haldia as a going concern for a lump sum amount.
When the AO having gone through the MOU and contract after having made enquiries and after considering the replies of the assessee regarding the said transaction from the assessee, having accepted the transaction as a ‘slump sale’, which fact he acknowledges it in different paragraphs of the draft assessment order, then makes rectification u/s. 154 regarding the very same fact and finds mention of it in the final assessment order is a plausible view which cannot be termed as a finding unsustainable in law. The Ld. CIT, DR’s objection that the AO has not elaborately discussed about the slump sale makes it erroneous cannot be accepted for the simple fact that the assessee cannot dictate the AO how to write the assessment order. The assessee can only answer to the queries and place evidence before the AO in support of its averment, which in this case has been done by the assessee. All the records were furnished before the AO and the AO has called for details from the assessee regarding slump sale and has applied his mind and has decided to accept the claim of the assessee that the transaction in question is ‘slump sale’ which cannot be termed as erroneous simply because the AO has not made any detailed discussion about it in the assessment order. In the facts and circumstances of the case, we note that the case of assessee is similar or standing on better footing to the facts and circumstances of the Premier Automobiles Ltd., supra, so the view of the AO is in line with the view of the Hon’ble Bombay High Court in Premier Automobiles Ltd., supra which view, therefore, cannot be termed as unsustainable in law and is very much a plausible view on the facts of the case.
Since we find that the AO has made enquiries into slump sale transaction which took place in the relevant assessment year and the action of AO in accepting the claim of assessee that the transaction in question was a slump sale after detailed enquiry is a plausible view, so , we do not find that the twin conditions required for exercising the jurisdiction u/s. 263 of the Act is found missing/ existing/absent and, therefore, the Ld. CIT ought not to have exercised his revisional jurisdiction and, therefore, we cancel the
27 ITA No.676/Kol/2016 Ambo Agro Products Ltd., AY 2009-10
impugned revisional order dated 25.02.2015 of the Ld. CIT. Therefore, we are inclined to allow the appeal of the assessee. So, we quash the impugned order passed u/s. 263 of the Act.
In the result, appeal of assessee is allowed.
Order is pronounced in the open court on 19.05.2017 Sd/- Sd/- (Dr. A. L. Saini) (Aby. T. Varkey) Accountant Member Judicial Member Dated : 19th May, 2017 Jd.(Sr.P.S.) Copy of the order forwarded to: Appellant – Ambo Agro Products Ltd., Chandrakunj, 3, Pretoria Street, 1. 4th floor, Kolkata-71. Respondent – Pr. CIT, Kolkata-3, Kolkata. 2
The CIT(A), Kolkata 4. CIT , Kolkata 5. DR, Kolkata Benches, Kolkata /True Copy, By order,
Asstt. Registrar. ITAT, Kolkata.