CIT v. Artex Manufacturing Co.

227 ITR 260Supreme Court of India1997#3256 most cited

What is CIT v. Artex Manufacturing Co. authority for?

In a slump sale, the slump purchase price cannot be apportioned among individual assets for claiming depreciation, as there is no indication of the price attributable to specific assets out of the total sale consideration.

36

judgments rely on this decision, according to BharatTax’s citation analysis of 366,339 Indian tax judgments — from 2010 to 2025.

Also referred to as

CIT v. Artex Manufacturing Co · 227 ITR 260 · SC · slump sale · consolidated consideration · apportionment · individual assets · depreciation · opening WDV · section 50b

Sections most often in play

Section 115JBSection 143(3)Section 14ASection 32Section 43Section 50B
Read the full judgment

Issues it is cited on

section 2(42c)section 41(2)section 80ib(4)section 50bsection 43(6)opening wdvsection 38slump saler&d expenditureinitial assessment yeargoing concerndeduction under section 80ia

Judgments citing CIT v. Artex Manufacturing Co.

DCIT, Dehradun vs. M/S. Oil & Natural Gas Corporation Ltd., Dehradun

In the result, the appeal of the Revenue is dismissed

ITA 1967/DEL/2014[1995-96]Status: DisposedITAT Delhi26 Sept 2017AY 1995-96

Bench: Shri N.K. Saini & Shri K.N. Chary

Section 42Section 42(1)

…transfer was in the nature of slump sale and as is held by the Hon’ble Apex Court in PNB Finance Ltd. (supra) while referring to the decision in CIT vs. B.C. Sriniwas Shetty (1981) 128 ITR 294, and holding that the ratio of Artex Manufacturing Co. (1997) 227 ITR 260 (SC) has no application to the facts of the case and prior to 1.4.2000 there was no computation provision that could be brought to tax as capital gains the consideration received in slump sale. The Hon’ble Jurisdictional High Court followed this principle in CIT vs. DLF Ltd. (supra). While respectfully following the same, we are of the 7 consi…

Ambo Agro Products Ltd., Kolkata vs. The PCIT, Kolkata-1, Kolkata

In the result, appeal of assessee is allowed

ITA 676/KOL/2016[2009-2010]Status: DisposedITAT Kolkata19 May 2017AY 2009-2010

Bench: Shri A. T. Varkey, Jm & Dr. A. L. Saini, Am]

Section 143(2)Section 143(3)Section 263Section 50Section 50B

…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. 27. 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 Ambo Agro Products Ltd…

The Dy CIT Cir.1(1), Mumbai vs. M/S. Aegis Logistics Ltd, Mumbai

Appeal stands allowed

ITA 8372/MUM/2004[1999-2000]Status: DisposedITAT Mumbai10 Mar 2017AY 1999-2000

Bench: S/Sh.Rajendra & C. N. Prasadआयकर अपील सं./Ita/7825/Mum/2004,िनधा"रण वष" /Assessment Year:1999-2000 आयकर अपील सं./Ita/6905/Mum/2006 ,िनधा"रण वष" /Assessment Year:1999-2000 Aegis Logistics Limited Acit, Circle-1(1) 403, Peninsula Chambers, Morarjee Mills Mumbai. Compound,G.K. Marg, Lower Parel(W) Vs. Mumbai-400 013. Pan:Aaaca 3302 N (अपीलाथ" /Appellant) (""यथ" / Respondent) आयकर अपील सं./I.T.A./8372/Mum/2004 ,िनधा"रण वष" /Assessment Year:1999-2000 Acit, Circle-1(1) Vs. Aegis Logistics Limited Mumbai. Mumbai-400013 (अपीलाथ" /Appellant) (""यथ" / Respondent) राज"व क" ओर से / Revenue By: Shri S.K. Mishra-Dr अपीलाथ" क" ओर से /Assessee By: Shri Percy Pardiwala/Ms. Vasanti Patel सुनवाई क" तारीख / Date Of Hearing: 09/02/2017 घोषणा क" तारीख / Date Of Pronouncement:10/03/2017 लेखा लेखा सद"य लेखा लेखा सद"य सद"य, राजे"" सद"य राजे"" राजे"" केकेकेके अनुसार राजे"" अनुसार अनुसार/ Per Rajendra A.M.- अनुसार Challenging The Order Dated 16.6.2004 Of The Cit(A)-I,Mumbai The Assessee & The Assessing Officer(Ao)Have Filed Cross Appeals For The Year Under Consideration.The Assessee Has Also Filed Against The Penalty Imposed U/S.271(1)(C) For The Year Under Appeal.We Will Be Deciding All The Appeals By Single Common Order.Assessee-Company,Engaged In Business Of Manufacturing Of Chemicals,Filed Its Return Of Income,On 31.12.1999,Declaring Total Income Of Rs.5.97Crores.The Ao Completed Assessment U/S.143(3) Of The Act On 28.3.2002 Determin -Ing Its Income At Rs.13.93Crores. During The Course Of Hearing Before Us The Authorised Representative (Ar) Stated That The Assessee Was Not Interested In Pursuing Grounds No1.A, 1.C, 1.D & 1.E. Hence,Same Stand Dismissed, As Not Pressed.

For Appellant: Shri Percy Pardiwala/Ms. Vasanti PatelFor Respondent: Shri S.K. Mishra-DR
Section 143(3)Section 271(1)(c)

…and value of banking licence. On the facts, we find that item-wise earmarking was not possible. On the facts, we find that the compensation (sale consideration) of Rs. 10.20 crores was not allocable item-wise as was the case in Artex Manufacturing Co. [1997] 227 ITR 260. 18. For the aforestated reasons, we hold that on the facts and circumstances of this case, which concerns the assessment year 1970-71, it was not possible to compute capital gains and, therefore, the said amount of Rs.10.20 crores was not taxable under section 45 of the 1961 Act. Accordingly, the impugned judgment is set aside. 19. Before conclu…

M/S. Aegis Logistics Ltd., Mumbai vs. ACIT Cir. 1(1), Mumbai

Appeal stands allowed

ITA 7825/MUM/2004[1999-2000]Status: DisposedITAT Mumbai10 Mar 2017AY 1999-2000

Bench: S/Sh.Rajendra & C. N. Prasadआयकर अपील सं./Ita/7825/Mum/2004,िनधा"रण वष" /Assessment Year:1999-2000 आयकर अपील सं./Ita/6905/Mum/2006 ,िनधा"रण वष" /Assessment Year:1999-2000 Aegis Logistics Limited Acit, Circle-1(1) 403, Peninsula Chambers, Morarjee Mills Mumbai. Compound,G.K. Marg, Lower Parel(W) Vs. Mumbai-400 013. Pan:Aaaca 3302 N (अपीलाथ" /Appellant) (""यथ" / Respondent) आयकर अपील सं./I.T.A./8372/Mum/2004 ,िनधा"रण वष" /Assessment Year:1999-2000 Acit, Circle-1(1) Vs. Aegis Logistics Limited Mumbai. Mumbai-400013 (अपीलाथ" /Appellant) (""यथ" / Respondent) राज"व क" ओर से / Revenue By: Shri S.K. Mishra-Dr अपीलाथ" क" ओर से /Assessee By: Shri Percy Pardiwala/Ms. Vasanti Patel सुनवाई क" तारीख / Date Of Hearing: 09/02/2017 घोषणा क" तारीख / Date Of Pronouncement:10/03/2017 लेखा लेखा सद"य लेखा लेखा सद"य सद"य, राजे"" सद"य राजे"" राजे"" केकेकेके अनुसार राजे"" अनुसार अनुसार/ Per Rajendra A.M.- अनुसार Challenging The Order Dated 16.6.2004 Of The Cit(A)-I,Mumbai The Assessee & The Assessing Officer(Ao)Have Filed Cross Appeals For The Year Under Consideration.The Assessee Has Also Filed Against The Penalty Imposed U/S.271(1)(C) For The Year Under Appeal.We Will Be Deciding All The Appeals By Single Common Order.Assessee-Company,Engaged In Business Of Manufacturing Of Chemicals,Filed Its Return Of Income,On 31.12.1999,Declaring Total Income Of Rs.5.97Crores.The Ao Completed Assessment U/S.143(3) Of The Act On 28.3.2002 Determin -Ing Its Income At Rs.13.93Crores. During The Course Of Hearing Before Us The Authorised Representative (Ar) Stated That The Assessee Was Not Interested In Pursuing Grounds No1.A, 1.C, 1.D & 1.E. Hence,Same Stand Dismissed, As Not Pressed.

For Appellant: Shri Percy Pardiwala/Ms. Vasanti PatelFor Respondent: Shri S.K. Mishra-DR
Section 143(3)Section 271(1)(c)

…and value of banking licence. On the facts, we find that item-wise earmarking was not possible. On the facts, we find that the compensation (sale consideration) of Rs. 10.20 crores was not allocable item-wise as was the case in Artex Manufacturing Co. [1997] 227 ITR 260. 18. For the aforestated reasons, we hold that on the facts and circumstances of this case, which concerns the assessment year 1970-71, it was not possible to compute capital gains and, therefore, the said amount of Rs.10.20 crores was not taxable under section 45 of the 1961 Act. Accordingly, the impugned judgment is set aside. 19. Before conclu…

Larsen & Toubro Ltd, Mumbai vs. Addl CIT RG 3, Mumbai

Appeal of the AO is dismissed

ITA 4442/MUM/2010[1998-99]Status: DisposedITAT Mumbai27 Jul 2016AY 1998-99

Bench: S/Shri Joginder Singh & Rajendraआयकर आयकर अपील अपील संसंसंसं./Ita No./4442/Mum/2010 ,िनधा"रण िनधा"रण वष" वष" /Assessment Years: 1998-99 आयकर आयकर अपील अपील िनधा"रण िनधा"रण वष" वष" M/S. Larsen & Toubro Ltd. Dcit - Range 2(2) Room No. 577, 5Th Floor L&T House, N.M. Marg Vs. Ballard Estate, Mumbai-400001 Aayakar Bhavan, M.K. Road Pan: Aaacl0140P Mumbai-400020 आयकर आयकर आयकर अपील आयकर अपील अपील संसंसंसं./Ita No./4599/Mum/2013 ,िनधा"रण अपील िनधा"रण िनधा"रण वष" िनधा"रण वष" वष" /Assessment Years: 1998-99 वष" Dcit - Range 2(2) M/S. Larsen & Toubro Ltd. Vs. Mumbai-400020 Ballard Estate, Mumbai-400001 (अपीलाथ" /Appellant) (""यथ" / Respondent) Revenue By: Shri Mukund Chate Assessee By: Shri J.D. Mistry सुनवाई क" तारीख / Date Of Hearing: 24.06.2016 घोषणा क" तारीख / Date Of Pronouncement: 27.07.2016 आयकर आयकर अिधिनयम आयकर आयकर अिधिनयम अिधिनयम,1961 क" अिधिनयम क" क" धारा क" धारा धारा 254(1)केकेकेके अ"तग"त धारा अ"तग"त अ"तग"त आदेश अ"तग"त आदेश आदेश आदेश Order U/S.254(1)Of The Income-Tax Act,1961(Act) लेखा सद"य सद"य राजे"" राजे"" केकेकेके अनुसार अनुसार Per Rajendra A.M.- लेखा लेखा लेखा सद"य सद"य राजे"" राजे"" अनुसार अनुसार Challenging The Order Dt.26.03.20130Of The Cit(A)-5,Mumbai The Assessing Officer(Ao) & The Assessee Have Filed Cross-Appeals For The Year Under Consideration.Assessee-Company, Engaged In The Business Of Construction, Manufacturing Of Heavy Machinery & Cement, Etc., Filed It Return Of Income On,27.11.1998,Declaring Income Of Rs.37.20 Crores.The Ao Complet -Ed The Assessment,On 28.02.2001, Under Section 143(3) Of The Act, Determining The Income Of The Assessee At Rs.2,09,15,37,490/-.

For Appellant: Shri J.D. MistryFor Respondent: Shri Mukund Chate
Section 143(3)Section 254(1)Section 40A(9)

…e fact that no part of consideration could be attributed to specific assets and liabilities and subjected to tax under a different head of income. 4.1.After considering the submission of the assessee,the AO referred to the case of Artex Manufacturing Company(227 ITR 260) and held that where a portion was attributable to plant, machinery and the stock,the difference between the actual cost and returned and value of assets was assessable as business income u/s.41 (2), that the surplus over such difference was assessable as capital gains,that in the case under consideration there was no sale of entire business, tha…

D.C.I.T Cir - 7, Kolkata. vs. Bhagirath Agarwal, Kolkata

In the result, Revenue’s appeal is dismissed

ITA 79/KOL/2013[2009-10]Status: DisposedITAT Kolkata24 May 2016AY 2009-10

Bench: Shri Waseem Ahmed & Shri S.S.Viswanethra Ravi

Section 143(3)Section 50BSection 54B

…values being assigned to the individual assets and liabilities in such sales.” ITA No.79/Kol/2013 & CO. 27/Kol/2013 A.Y. 2009-10 DCIT Cir-7, Kol. v. Bhagirath Agarwal Page 4 (iii) The Hon'ble Supreme Court in the case of CIT v. Artex Manufacturing Co (1997) 227 ITR 260 has held that in case if individual value has been assigned to assets transferred to the buyer then it is not the case of sump sale and if no individual value has been assigned to the assets than it is a case of slump sale. Similarly view has been taken by the Hon'ble Supreme Court in the case of PNB Finance (20080 307 ITR 75 and Bombay High Cour…

M/S. the Supreme Industries Ltd, Mumbai vs. The ACIT Cen Cir-29, Mumbai

In the result, appeal of the assessee is allowed in part, in terms indicated hereinabove

ITA 7524/MUM/2007[2004-2005]Status: DisposedITAT Mumbai29 Apr 2016AY 2004-2005

Bench: Shri R.C.Sharma, Am & Shri Amarjit Singh, Jm आमकय अऩीर सं./Ita No.7524/Mum/2007 (नििाारण वषा / Assessment Year :2004-2005) The Supreme Industries Limited, Vs. The Acit, Cc-29, 612, Raheja Chambers, 213, Mumbai Nariman Point, Mumbai-400021 स्थामी रेखा सं./ जीआइआय सं./ Pan/Gir No. : Aaact 1344 F (अऩीराथी /Appellant) (प्रत्मथी / Respondent) .. ननधाारयती की ओर से /Assessee By : Shri Nitesh Joshi याजस्व की ओर से /Revenue By : Shri Alok Johri सुनवाई की तायीख / Date Of Hearing : 02/02/2016 घोषणा की तायीख/Date Of Pronouncement 29/04/2016 आदेश / O R D E R Per R.C.Sharma (A.M): This Is An Appeal Filed By The Assessee Against The Order Of Cit(A), Mumbai, For The Assessment Year 2004-2005. 2. First Grievance Of The Assessee Relates To Taxing Of Capital Gains Amounting To Rs.10,30,06,590/- U/S.50B R.W.S.2(42C) Arising On The Transfer Of The Bopp Films Undertaking To Xpro India Ltd. (Xil). 3. Rival Contentions Have Been Heard & Record Perused. This Ground Relates To Taxation Of Capital Gains Amounting To Rs.10,30,06,590/- U/S.50B Read With Section 2(42C) Of The I.T. Act. The Facts In Brief Relating To This Addition Are That During The Previous Relevant To The Assessment Year Under Appeal, The Assessee Entered Into A Business Transfer Agreement (Bta) With Xpro India Ltd (Xil) For Sale Of Its Bopp Films Undertaking At Pithampur, Madhya Pradesh As A Going-Concern For A Total

For Appellant: Shri Nitesh JoshiFor Respondent: Shri Alok Johri
Section 2Section 50B

…ction of AO after observing as under :- “I have considered the submission of the ARs and the facts on record. I have also carefully perused the decisions relied upon by the ARs. The decisions of the Supreme Court in the case of CIT vs. Artex Manufacturing Co. 227 ITR 260 (SC) and CIT vs. Electric Control Gear Manufacturing Co. 227 ITR 278(SC) does not help the case of the appellant as these decisions were given prior to the introduction of section 50B in the IT. Act and were with reference to section 41(2) of the IT. Act. As regards the decisions in the case of Karnbli Co-operative Sugar Factory Ltd. vs. JCIT 83…

M/S Hindustan Engineering & Industries Ltd., Kolkata vs. A.D.I.T Range - 5, Kolkata.

In the result, appeal of assessee is allowed

ITA 330/KOL/2013[2009-10]Status: DisposedITAT Kolkata15 Mar 2016AY 2009-10

Bench: Shri Mahavir Singh, Jm & Shri M. Balaganesh, Am]

For Appellant: Shri Siddharth Jhajharia, FCAFor Respondent: Shri G. Mallikarjuna, CIT, DR
Section 143(3)Section 2Section 50BSection 5O

…the undertaking with lock, stock and barrel. In this case, the entire undertaking was almost transferred with almost all the assets and liabilities and it constitute a slump sale. The Hon'ble Supreme Court in the case of CIT v. Artex Manufacturing Co. [1997] 227 ITR 260 has held that in order to constitute a slump sale, there must be a sale of a going concern as a whole on as is where is basis and in the present case also entire unit has been sold. 36. The basic controversy is whether there was a sale of itemized assets or whether there was a sale of the entire unit/industrial undertaking. Further, it is held th…

M/S. Mafatlal Industries Ltd., Mumbai vs. DCIT Spl. RG. - 20, Mumbai

In the result, appeal of the assessee is partly allowed for statistical purposes

ITA 4597/MUM/2005[1999-2000]Status: DisposedITAT Mumbai21 Oct 2015AY 1999-2000

Bench: Shri D.Karunakara Rao & Shri Sandeep Gosainआयकर अपीऱ सं./I.T.A. No.4597/Mum/2005 (निर्धारण वर्ा / Assessment Year : 1999-2000)

For Appellant: Shri Girish DaveFor Respondent: Shri Shishir Dhamija
Section 35D

…ion. The assessee did not satisfy the AO and accordingly, the AO reduced the depreciation as mentioned above. In the first appellate proceedings, the ld. CIT(A), by following the decision of Hon’ble Supreme Court in M/s Artex Manufacturing Company reported in 227 ITR 260 (SC) upheld the action of the AO. Therefore, the assessee is in appeal before us. 29. Before us, the ld.AR submitted that an Identical issue had come up before this Tribunal in assessee’s own case for the assessment year 1997- 98 and the Tribunal has set aside this issue to the file of the AO for fresh adjudication in the light of the Tribunal o…

Profile Gears & Engineering Private Limited, Chennai vs. ACIT, Chennai

In the result, the appeal filed by the assessee in ITA

ITA 286/CHNY/2014[2006-2007]Status: DisposedITAT Chennai08 Apr 2015AY 2006-2007

Bench: Shri Chandra Poojari & Shri Challa Nagendra Prasadआयकर अपील सं./ I.T.A. No.286/Mds/2014 ("नधा"रण वष" / Assessment Year : 2006-2007)

For Appellant: Shri. C. Srikanth, C.AFor Respondent: Dr. Nischal, JCI.T
Section 143(2)Section 143(3)Section 2Section 263Section 50B

…npower there was a slump sale and no I.T.A.No.286/Mds/2014. :- 7 -: capital gain exigible by application of section 50 of the Income tax Act”. The Authorized Representative further relied upon the judgment in the case of CIT vs. Artex Manufacturing Company 227 ITR 260 (SC) which held as follows: “(i) that the assessee could not be taxed as a ‘’registered firm’’ and had to be taxed in the status of a ‘’body of individuals’’. (ii) that in the agreement of sale, there was 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 befor…

M/S Titanor Components Ltd vs. CIT & Anr

The appeals are dismissed

ITA - 190 / 2002HC Delhi22 Dec 2014
Section 143(3)Section 250Section 260A

…ant and machinery on the date of the sale. Therefore, the authorities and the Tribunal deemed it appropriate to rely upon the surveyor‟s report for computing actual cost and we agree with the said conclusion. 13. CIT vs. Artex Manufacturing Co. (1997) 227 ITR 260, was a case of slump sale on lump-sum price, but the Supreme court held that the 2014:DHC:7304-DB ITA No. 190 & 191/2002 Page 10 of 15 balancing charge under Section 41(2) of the Act could be computed, inspite of the fact w…

Titanor Components Ltd.) vs. CIT and Another

The appeals are dismissed

ITA/190/2002HC Delhi22 Dec 2014
Section 143(3)Section 250Section 260A

…ant and machinery on the date of the sale. Therefore, the authorities and the Tribunal deemed it appropriate to rely upon the surveyor‟s report for computing actual cost and we agree with the said conclusion. 13. CIT vs. Artex Manufacturing Co. (1997) 227 ITR 260, was a case of slump sale on lump-sum price, but the Supreme court held that the 2014:DHC:7304-DB ITA No. 190 & 191/2002 Page 10 of 15 balancing charge under Section 41(2) of the Act could be computed, inspite of the fact w…

The Commissioner of Income Tax vs. M/S. Nutrine Confectionery Co. P. Ltd

Appeal stands dismissed

ITA/364/2007HC Karnataka02 Dec 2013

Bench: N.KUMAR,RATHNAKALA

Section 260ASection 45Section 65

…value of banking licence. On facts, we find that item-wise earmarking was not possible. On facts, we find that the compensation (sale consideration) of Rs. 10.20 crores was not allocable item- wise as was the case in Artex Manufacturing Co. [1997] 227 ITR 260.” 5. From the aforesaid judgment, it is clear that a charging section and the computation provisions together constitute an integrated code. When in a case, the computation provisions do not apply, such a case would not come within the ambit of Section 45. It is because of these pronouncements, now the law has been amended introducing…

The Commissoner of Income Tax vs. M/S B V Reddy Marketing P. Ltd

Appeal stands dismissed

ITA/353/2007HC Karnataka02 Dec 2013

Bench: N.KUMAR,RATHNAKALA

Section 260ASection 50B

…value of banking licence. On facts, we find that item-wise earmarking was not possible. On facts, we find that the compensation (sale consideration) of Rs. 10.20 crores was not allocable item- wise as was the case in Artex Manufacturing Co. [1997] 227 ITR 260.” 6. From the aforesaid judgment, it is clear that a charging section and the computation provisions together constitute an integrated code. When in a case, the computation provisions do not apply, such a case would not come within the ambit of Section 45. It is because of these pronouncements, now the law has been amended introducing…

Commissioner of Income Tax vs. Ece Industries Ltd

ITA/417/2007HC Delhi24 Dec 2010

Bench: HON'BLE MR. JUSTICE A.K.SIKRI,HON'BLE MR. JUSTICE SURESH KUMAR KAIT

Section 50Section 50(2)

…ection 50(2) were not attracted. It also contended that it was an old concern for more than 36 months, its transfer would give long term capital gain. The assessee also relied on Commissioner of Income-Tax, Gujarat v. M/s. Artex Manufacturing Co. [227 ITR 260 (SC)] Sarabhai M. Chemicals Private Ltd. and Telerad Private Ltd. v. P.N. Mittal, Competent Authority, Inspecting Assistant ITA Nos.417 of 2007 & 1069 of 2007 Page 3 of 22 Commissioner of Income-tax, Acquisition Range-II and Anr. [126 ITR 01 (Guj)]. However, the AO was not convinced with the contenti…

Commissioner of Income Tax vs. ECE Industries Limited

ITA-417/2007HC Delhi24 Dec 2010
Section 50Section 50(2)

…ection 50(2) were not attracted. It also contended that it was an old concern for more than 36 months, its transfer would give long term capital gain. The assessee also relied on Commissioner of Income-Tax, Gujarat v. M/s. Artex Manufacturing Co. [227 ITR 260 (SC)] Sarabhai M. Chemicals Private Ltd. and Telerad Private Ltd. v. P.N. 2010:DHC:6300-DB Commissioner of Income-tax, Acquisition Range-II and Anr. [126 ITR 01 (Guj)]. However, the AO was not convinced with the contentions made by the assessee and observed that the case law relied upon by the assessee was distinguishable. He held th…