TaxTMI 
TaxTMI 
2010 (10) TMI 673
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....ment of sale of the industrial undertaking as slump sale under Section 50B and in the connected case, the Commissioner (Appeals) cancelled the assessment with direction to the officer to compute liability for capital gains under Section 50 of the Income Tax Act. The Tribunal considered the issue in detail in the case of the assessee covered by I.T.A.1470/2009, allowed the said Appeal and following the said decision allowed the other appeal as well without considering facts in that case which are admittedly same as the facts in I.T.A.1470/09. We therefore proceed to consider I.T.A.1470/2009 wherein the Tribunal has considered the matter in detail. 2. We have heard senior counsel Mr. P.K.R.Menon appearing for the Revenue and Mr.P.Balakrishnan appearing for the respondent-assessee. 3. The admitted facts that lead to the controversy are the following. The assessee which was engaged in seafood processing and export with their own factories transferred one of their industrial units as a going concern during the previous year relevant for the assessment year 2003-04 to Hindustan Lever Limited for a total consideration of 22.20 crores. The consideration agreed is the aggreg....
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.... powers under Section 147 of the Act which was also challenged by the assessee in appeal. In this case, the first appellate authority allowed the appeal on both the grounds that is by cancelling the income escaping assessment as passed without jurisdiction and on merits by holding that the sale of the industrial undertaking is not slump sale but is to be assessed as sale of depreciable asset under Section 50 of the Act. In the connected case, the CIT(Appeals) took an entirely different view by upholding the assessment of sale of Industry as a "slump sale". In the second appeal filed by the revenue before the Tribunal in this case, the Tribunal upheld the CIT (Appeals) order on merits but did not consider the validity of reopening raised by the revenue as the said ground had become academic by virtue of the Tribunal's decision on merit in favour of the assessee. It is against this order of the Tribunal revenue has filed the appeal. 4. Based on the facts stated above, the only question to be considered is under what provision of the Income Tax Act capital gain is to be assessed on the profit received by the assessee on the sale of the industrial undertaking.  ....
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....of the Act, assessee claimed that capital gain is assessable on sale of the undertaking as sale of depreciable assets under Section 50 of the Act. The question now to be considered is whether the claim of the assessee is tenable or not. In this regard we have to consider the scope of Section 50 and Section 50B of the Act. In our view assessee's claim for assessment of capital gain under Section 50 of the Act is not tenable because the said Section provides for assessment of capital gains in the case of sale of depreciable assets. This Section provides for assessment for capital gain of assets forming part of block of assets in respect of which depreciation is allowed under the Act. What the assessee has sold is not any asset in a block, if at all the assets sold form part of a block of asset on which depreciation was being allowed. On the other hand sale is of an industrial undertaking as a whole which includes land, building, machinery, equipments etc. as a going concern with all the assets and liabilities. We have already found that the sale is of business undertaking as a going concern and the same squarely falls within the definition of "slump sale" as defined under Section 2(4....
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.... asset or a block of asset are sold on which depreciation was allowed and not when the industrial undertaking with depreciable assets are sold as a whole. In fact, when Section 50B provides for computation of capital gain on the sale of the undertaking it covers capital gain payable on depreciable assets forming part of the industrial undertaking also. In other words the distinction between Section 50 and 50B is that while Section 50 provides for computation of capital gain on the sale of only depreciable assets Section 50B provides for computation of capital gain on the sale of an undertaking as a whole which includes depreciable assets as well. In fact there is also difference in the mode of computation of capital gains under Section 50 for depreciable assets and for "slump sale" under Section 50B. Section 50 is a full code for computation of capital gains on depreciable assets. On the other hand under Section 50B the asset has to be first classified between long term or short term capital asset and then for the purpose of Sections 48 and 49 net worth has to be computed in terms of explanation 1 of the said Section. The capital gain under Section 50B is the sale proceeds as reduc....