TaxTMI 
TaxTMI 
2005 (6) TMI 25
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....sioner of Income-tax (Appeals) order that the sale of factory along with machineries, furniture shall be treated as long-term capital gains in spite of the fact that depreciation had been claimed on the building, machinery and furniture? (ii) Whether, on the facts and circumstances of the case, the proviso to section 50 of the Act would be applicable in respect of depreciable assets sold along with non-depreciable assets sold in a single transaction of sale?" We have heard learned counsel for the parties. The substantial questions of law raised by the Revenue relate to the direction of the Commissioner of Income-tax (Appeals) that the profit on sale of a bakery has to be assessed as long-term capital gains, thereby granting exemption und....
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....the Act wherein computation of capital gains on depreciable assets is different from those of non-depreciable assets. The Assessing Officer held that the sale effected by the assessee was of a single unit consisting of depreciable assets, and hence the entire gains arising therefrom were short-term capital gains. Before the Commissioner of Income-tax (Appeals), it was submitted by the Department that the sale is supported by two separate documents and separate values have been assigned for transfer of movable and immovable assets, and liabilities have not been taken over, and therefore, it was to be considered as a case of sale of individual items of assets, movable and immovables being sold separately. Hence it was alleged that exemption ....
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.... not running when it was sold, but was closed. The Commissioner of Income-tax (Appeals) has clearly held that it was the entire concern which was sold. No doubt the sale was done through two separate documents in respect of movable and immovable assets, but evidently this was done only because immovable property can only be sold through a registered sale deed. In paragraph 12 of his order, the Commissioner of Income-tax (Appeals) has observed: "In any event in the instant case the letter of understanding between the appellant and the buyer shows that the intention was to sell the entire bakery business with land, building, plant and machinery and the closing stock as a going concern for a total and lump sum consideration of Rs. 25,55,555.....