AI Drafter 
TaxTMI 
TaxTMI 
2011 (1) TMI 1115
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....) for the block period 01/04/1996 to 18/12/2002. During search, the Department unearthed sale agreement between the respondent assessee and two others for the sale of a petroleum outlet as a going business concern for a total consideration of Rs.82 lakhs, out of which Rs.5 lakhs was retained by the purchasers to be paid after the dealership is transferred by the petroleum Company to the purchasers. It is the admitted fact that the assessee was carrying on the business as dealer of the Indo-Burma Petroleum Company Limited at a place called Kothamangalam in Ernakulam district. The business concern as a whole with land and building, improvements, fittings and even electricity and telephone connections etc. was sold by the respondent assessee a....
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....earned Senior counsel appearing for the Revenue and Shri.P.Balakrishnan, learned counsel appearing for the respondent assessee. 3. Before proceedings to consider the correctness or otherwise of the orders of the lower authorities, we should consider the relevant statutory provisions systematically introduced in the Act providing for assessment on the sale of business assets. None of the authorities have considered the scope of Sections 50B and 2 (42C) of the Act introduced by Finance Act, 1999 with effect from 01/04/2000, which provides for assessment on capital gains on "slump sale" defined under Section 2(42C) of the Act, for which a special scheme of assessment was provided under Section 50B of the Act. The provision next intro....
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....to Section 55(2) of the Act. The learned Senior counsel for the Revenue brought to our notice the admission made by the assessee in the course of search that the sale consideration for right to carry on business, which was subject to approval by the petroleum Company which granted dealership licence to the respondent, was only Rs.5 lakhs and the balance Rs.77 lakhs out of Rs.82 lakhs represents sale consideration for the assets including land and building and equipments. Consideration received for transfer of business as such cannot be assessed during the block period, which is prior to the amendment to Section 55(2) of the Act. However the question is whether the sale consideration attributable to sale of land, building and other business ....
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....itted by the assessee in the sworn statement furnished under Section 132(4) pursuant to search it clearly stated that the consideration paid is for the sale of the land and building, equipments, electricity and telephone connections and also the business as a going concern, which is obviously subject to approval of transfer of dealership by the petroleum Company which granted dealership licence to the respondent assessee. The consideration for the transfer of the dealership licence separately agreed was only Rs.5 lakhs and the same was in fact withheld by the purchaser on condition that the same will be paid to the assessee only on the petroeum Company approves the transfer of business. So much so, out of Rs.82 lakhs, Rs.77 lakhs represents....
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....le to tax. In this case land, building, equipments and fittings in the petrol pump falls within the description of capital asset. 7. Section 50 provides for special provision for computation of capital gains in case of depreciable assets. What is provided under this Section is that capital asset is an asset forming part of block of assets in respect of which depreciation has been allowed under the Act, and since sale of the same attracts tax, the sale proceeds has to be assessed under the said provision of the Act. So much so, in our view, the value of land, building and depreciable assets are to be separately estimated and assessed for capital gains. However, the value of the licence, which constitutes consideration&nbs....
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.... 2(42C) and Section 50B, slump sale has to be assessed strictily in accordance with the provisions of Section 50B. In other words, until the special provision is introducted, land and building and depreciable assets are assessble under other provisons of the Act, particularly Section 50. In view of our above findings, we are of the view that the orders of the Tribunal confirming the orders of the CIT (Appeals) is not sustainable. The sale of the capital assets like land, building and depreciable assets are assessable separately. However, this could be done by bifurcating the sale consideration in a realistic manner between the value attributable to land, builiding and fixed assets and the value fixed for the transfer of the busine....