TaxTMI 
TaxTMI 
2016 (5) TMI 1262
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....the tea estate as slump sale. 3. Facts in brief are that assessee in the present case is a partnership firm and owns two tea estate namely - Suboang & Hatticherra Tea Estates. During the year assessee has sold both the tea estates to M/s Prithvi Tea Co. Pvt. Ltd. for a total consideration of Rs.3,58,66,118/-. The tea estates were comprised of land and plantations, common factory building and plant and machinery. The buyer M/s Prithvi Tea Co. Pvt. Ltd. paid an amount of Rs. 2.83 crores and for remaining balance, the buyer has taken over the certain liabilities. As a result of sale there arose capital gain which was claimed as exempted by assessee. During the course of assessment proceeding, AO observed that the tea estates were sold as a whole and as going concern. Therefore, the provision of Sec. 50B of the Act is attracted to this transaction. Accordingly, AO sought clarification from the assessee for the applicability of the provision of Sec.50B of the Act. In compliance to the notice, assessee submitted that all the assets were sold after assigning the value to the individual assets including specified liability which does not include any market liability or liabilities arising....
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....e of CIT v. Artex Manufacturing Co (1997) 227 ITR 260 has held that in case if individual value has been assigned to assets transferred to the buyer then it is not the case of sump sale and if no individual value has been assigned to the assets than it is a case of slump sale. Similarly view has been taken by the Hon'ble Supreme Court in the case of PNB Finance (20080 307 ITR 75 and Bombay High Court in the case of Premier Automobiles Ltd. v. ITO (2003) 264 ITR 193 and CIT v. Polychem (2012) 343 ITR 115. (iv) In the case of the appellant the value has been assigned to the individual assets in the memorandum of sale dated 11.08.2008 hence the sale transaction between the appellant and Prithvi Tea Company P Ltd cannot be termed as slump sale and accordingly this ground of appeal is decided in the favour of the appellant. (v) During the course of hearing the Ld AR has raised an alternate plea that even if sale to M/s Hindustan Tea Company is considered as slump sale than also in view of section 2(14)(iii) of the Act, the value of agricultural land can't be taxes, is not adjudicated since i am holding that the sale of Tea Estates by the appellant to M/s Hindustan Tea Company ....
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.... gain arising from the transfer of long-term capital assets and shall be deemed to be the income of the previous year in which the transfer took place. Further, Section 2(42C) of the Act defines 'slump sale' as a transfer of one or more undertakings as a result of the sale for a lump sale consideration without values being assigned to the individual assets and liabilities in such sales. The Explanation I to section 2(42C) of the Act further provides that 'undertaking' shall have the meaning assigned to it in the Explanation I of clause (19AA) of section 2 of the Act, whereby an undertaking means, in an inclusive sense, any part of an undertaking, or a unit or division of an undertaking or a business activity taken as a whole, but does not include individual assets or liabilities or any combination thereof not constituting a business activity. The Explanation 2 to section 2(42C) of the Act further provides that the determination of the value of an asset or liability for the sole purpose of payment of stamp duty, registration fees or other similar taxes or fees shall not be regarded as assignment of values to individual assets or liabilities. 18. The admitted facts....
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....rs would create serious labour problems and it would not be possible either for the assessee or for the buyer to close the contract without having a clear understanding on the engagement of labour deployed. Therefore, the agreement with the buyer that the new owners would absorb the existing labour force was not a salient feature to decide whether the sale was a slump sale or not. The meaning of the expression 'going concern' has to be understood in the light of the peculiar nature of the property tram/erred in the instant case. What was transferred in the instant case was a tea estate. The activities in a tea plantation/estate are continuous and un-interrupted ones and tapping operations have to be carried out on a regular basis and all other activities have to be carried out without any interruption. Therefore, by nature of the activities of the Tea estate itself, it is a 'going concern'. Therefore, while adding an expression in the agreement that the Tea estate was transferred as a going concern, the purpose was only to refer to the estate of affairs and to an existing fact and not to create any legal proposition in the context of the sale deed. Therefore, the AO....