TaxTMI 
TaxTMI 
2008 (11) TMI 336
X X X X Extracts X X X X
X X X X Extracts X X X X
....98-99 proposing to raise the following substantial question of law: "(i) Whether, on the facts and in the circumstances of the case and in law, the Income-tax Appellate Tribunal is right in holding that the sale of the Betalactum Division by the assessee-company was a slump sale to which sections 50 and 50A are not applicable and that long-term capital gain is to be computed by indexing the cost of acquisition of the Betalactum Division and its improvement?" 2. The assessee claimed loss of Rs. 12,67,69,823 under the head "Long term capital loss" on the sale of the Betalactum Division on slump sale basis by deducting, from the sale proceeds, the acquisition of the Betalactum Division and improvement. The Assessing Officer rejected the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eparate consideration. The proprietary rights therein were retained till June 30, 2000. On facts, in view of the above numerous judicial pronouncements, it cannot be said that what the transferee acquired was not a going concern. Rather, after the transfer, the transferee carried on the business without any disruption therein. In CIT v. West Coast Chemicals and Industries Ltd. (In Liquidation) [1962] 46 ITR 135 (SC), CIT v. F. X. Periera and Sons (Travancore)Pvt. Ltd. [1990] 184 ITR 461 (Ker), Premier Automobiles Ltd. v. ITO [2003] 264 ITR 193 (Bom) and Asst. CIT v. Raka Food Products [2005] 277 ITR 261 (Mad), amongst others, it has been held that in the case of a sale of an undertaking as a whole, on a going concern basis, if some asset....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rising:- (a) tangible assets, being buildings, machinery, plant or furniture; (b) intangible assets, being know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature, in respect of which the same percentage of depreciation is prescribed;" 7. Learned counsel for the assessee relied upon the judgment of the hon'ble Supreme Court in CIT v. Mugneerarn Bangur and Co. (Land Department) [1965] 57 ITR 299. In the said judgment, the question for consideration was whether receipt of money by sale of business concern was taxable profit or capital gain. 8. The test applied was that in sale of the whole concern, there could be no question of profit taxable to income-tax. T....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... ITR 491, wherein apart from referring to the judgments of the hon'ble apex court in Mugneeram Bangur and Co. (Land Department) [1965] 57 ITR 299 and Electric Control Gear Mfg. Co. [1997] 227 ITR 273 (SC), reference was made to the observations in 11 judges-judgment in Rustom Cavasjee Cooper v. Union of India [1970] 40 Comp Cas 325 (SC); AIR 1970 SC 564 to the effect that the aggregate value of components of a company could not be valued as value of entirety of the unit especially when the property is a going concern with an organized business. The said observations were made in the context of considering the contention whether valuation of compensation for acquisition of banking companies with reference to the assets of the said company wa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....] 155 1TR 681, wherein, following the observations of the Supreme Court in CIT v. Mugneeram Bangur and Co. (Land Department) [1965] 57 ITR 299, the court held that if the sale is of a whole concern and no part of the agreed price is indicated against different and definite items having regard to their valuation on the date of sale, the aggregate price cannot be apportioned of capital assets in specie. We, accordingly, answer the second question in the affirmative, in favour of the Revenue and against the assessee." 11. Learned counsel for the assessee further pointed out that the term "block of assets" in section 2(11) of the Act only referred to depreciable assets. For this proposition, reliance has been placed in Asst. CIT v. Raka Food....