2005 (1) TMI 56

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....x Act, 1961, on the sale of assets, the written down value of which was not ascertainable, instead of the written down value of the remaining block of assets be reduced by the amount of sale receipts?" The reference relates to the assessment year 1976-77. Briefly stated the facts giving rise to the present reference are as follows: The respondent-assessee is a public limited company. During the assessment year in question it had sold certain items of old machinery and a few other items of furniture and fittings, etc. It had claimed that the written down value of these assets is not ascertainable. In the course of the assessment, the Assessing Officer noted that in the past also the respondent-assessee had shown the sale of assets whos....

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....581 of 1971-72. In that case also, separate written down value of the items sold could not be ascertained. In such a situation, the Tribunal had held that there could be two alternatives, namely, either to take the whole of the amount, as the profit or to take the profit as nil and to reduce the written down value of the remaining block by the amount of the sale proceeds. The formula adopted by the Tribunal was a via media and in that case, on rough basis, 50 per cent, of the sale price was treated as profit under section 41(2). There appears force in the contention of the Revenue that if this formula is applied, from year to year, then the assessee may get undue advantage and it may result in loss of revenue. In case the other formula is a....