TaxTMI 
TaxTMI 
2013 (10) TMI 511
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....ain from Rs.20,50,98,284/- to Rs.8,08,55,510/- thereby giving relief of Rs.12,42,42,474/-. 3. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of appeal. 2. The brief facts of the case are that assessee is in the business of manufacturing and selling of milk and dairy products. The return of income was filed at a loss of Rs.3,52,92,18/-. The case of the assessee was selected for scrutiny. During assessment proceedings, the Assessing Officer observed that the assessee had disposed off its entire fixed assets of the Ice Cream Division and declared short term capital gain of Rs.1,85,75,528/- on the slump sale> The short term capital gain was arrived at after reducing net worth of the undertaking amounting to Rs.23,14,24,472/- out of sale consideration of Rs.25 crores. The Assessing Officer observed that the net worth of the undertaking as required to be calculated under the provisions of section 50B(3) in Form No. 3CEA has reflected the net worth at Rs.23,14,24,472/-. The Assessing Officer observed that there was a calculation mistake in the said form wherein at....
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....the calculation furnished by the appellant company before the ld. AO and also during the appellate proceedings the net consideration would work out to Rs.21 ,90, 18,604/- as per details hereunder:- Net Sales consideration as per para 8.1 of agreement: Consideration towards Fixed assets Rs.25,00,00000/- Add: Current liabilities. Rs.1,34,64,003. (As per Schedule 1 of the agreement. Rs.26,34,64,003 Paper Book Page 73 ) Less: Current liability. Rs.4,44,45,399. (As per Schedule 2 of the agreementI Net Sales consideration Rs.21,90,18,604. Paper Book Page 71 ) The sales consideration has been duly specified in clause no. 8.1 of the Business Acquisition Agreement dated 1.11.2007 (Paper Book Page 61) entered into between the appellant company and the purchaser and therefore it will be correct to fix the value of sales consideration at Rs.21 ,90, 18,604/-. As regards the computation of net worth of the undertaking, the appellant company in the return of income has computed the net worth as under:- WDV of Fixed assets transferred by way of Slum Sales. Rs.13,81,63,094/- Add: Amount of secured....
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....ction 50B of the Act. He further argued that whether liabilities are taken over or not does not mater as Section 50B does not talk about it and capital gain has to be calculated as per special provisions of section 50B. Reliance in this respect was placed on the case law of Zuari Industries Ltd. v. ACIT reported in 9 SOT 569 (Bom.). 7. The Ld AR, on the other hand, took us to page 51 of paper book and invited our attention to the sale consideration as per para 'A' of Article 8.1 which was at Rs.21,90,18,604/-. He took us to page 5 of paper book wherein article 1.1. defines assumed liabilities which meant sundry creditors and amounts payable referred to in Schedule-I. He further took us to Schedule-I placed at pages 69 to 71 and pointed out that term loan was not part of assumed liabilities and therefore the amounts of term loan cannot be reduced for the purpose of calculation of net worth and therefore the Ld CIT(A) has rightly not included the same for calculation of net worth. Continuing his arguments he submitted that the term loans were to be paid to the bank which was not taken over by the purchaser and which were repaid after getting sale consideration from the purchaser. ....
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.... or division as reduced by the value of liabilities of such undertaking or division as appearing in its books of accounts. Explanation (2) for computing net worth the aggregate value shall be:- a) In the case of depreciable assets, the WDV of the block of assets determined in accordance with the provisions contained in sub items (c )of item (i) of sub clause (6) of section 43. b) In the case pf capital assets in respect of which the whole of the expenditure has been allowed or is allowable as a deduction u/s 35AD - nil & (c ) in the case of other assets the book value of such assets. 11. From the above explanation to the provision it is very much clear that for the purpose of calculation of net worth of an undertaking, the following is to be followed"- a) WDV of admissible assets + b) Book value of other assets. c) Aggregate of total assets of undertaking or division - d) Value of liabilities relatable to the undertaking as appearing in the books of accounts. e) Net worth. 12. The above method of calculation of net worth is further fo....