Deduction for sale of business as a whole upheld where no assets were retained and liabilities alone did not defeat transfer

Sale consideration realised on transfer of a business as a whole was deductible under the applicable turnover rule where the agreement did not show that any assets were retained by the seller. Mere assumption of pre-existing liabilities by the seller did not, by itself, defeat the character of a transfer of the business as a whole. In the absence of material showing that any part of the assets remained with the seller or that business credits were taken over by him, the contrary finding could not stand. The assessee was therefore entitled to the deduction, and inclusion of the sale consideration in taxable turnover was set aside.

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Issues: Whether the sale consideration received on transfer of the business was deductible under the rule applicable to amounts realised by sale of a business as a whole.

Analysis: The relevant rule allowed deduction of amounts realised by a dealer by the sale of his business as a whole. The Tribunal had proceeded on the view that assets and liabilities were retained by the seller, but the agreement did not show retention of any assets by the seller. Mere assumption of pre-existing liabilities by the seller did not, by itself, mean that the business had not been transferred as a whole. In the absence of any material showing that any part of the assets remained with the seller or that amounts standing to the credit of the business were taken over by him, the finding that there was no transfer of the business as a whole was unsustainable.

Conclusion: The assessee was entitled to the deduction, and the inclusion of the sale consideration in taxable turnover was set aside.

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