2021 (12) TMI 143

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....ar 2006-07, ITA No. 1830/Kol/2013 for the assessment year 2007-08 and ITA No. 2122/Kol/2013 for the assessment year 2007-08. The appellant revenue has framed the following substantial question of law for consideration:- "Whether on the facts and in the circumstances of the case the Learned Income Tax Appellate Tribunal, "B" Bench, Kolkata has erred in law in deleting the disallowance of sum of Rs. 3.50 Crores and Rs. 2.11 Crores for the assessment year 2006-07 and 2007-08 respectively on account of slump sale of chemical undertaking under Section 50B of the Income Tax Act, 1961 by relying on its own decision for assessment year 1994-95 which has not been accepted by the revenue and the appeal has been filed before this Hon'ble Court w....

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....e described in the said agreement as follows:-- "(f) Excluded Assets means-- (a) cash in bank, cheques deposited in bank account and other unrealized cheques of ICI. (b) all unpaid and outstanding insurance claims pertaining to the Fertilizer Business as at the Transfer Date; (c) all other assets whether tangible or intangible pertaining exclusively to ICI's various business other than the Fertilizer Business". 12. The Revenue contended that since these assets were left out, it was not a sale of the entire undertaking and did not qualify as a slump sale. 13. Mr. Dutta, learned counsel for the appellant reiterated this submission. The tribunal by its impugned judgment and order dated 29th February, 2008 held that the entire f....

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....re to be deducted. Since the cost of acquisition of intangible assets could not be determined the income was not chargeable to capital gains tax. It upheld the order of the CIT (Appeals). 15. This concept of slump sale was discussed in CIT v. Mugneeram Bangur & Co. [1965] 57 ITR 299 (SC). At this stage it is quite important to appreciate the ratio of CIT v. Artex Manufacturing Co. [1997] 93 Taxman 357/227 ITR 260 (SC). The written down value of the plant, machinery and dead stock according to the assessee's books was Rs. 4,36,896/-. The undertaking was sold on a valuation of these items as Rs. 15,87,296/-. According to the department, the written down value was Rs. 3,32,276/-. The difference between (Rs. 15,87,296 - Rs. 3,32,276) = Rs....

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.... be determined, the cost of acquisition and cost of improvement could not be determined. Since this could not be done the charging Section 45 of the said Act for computation of capital gains did not apply. Hence, it was not possible to compute capital gains. Therefore, Rs. 10.20 crores was not taxable under section 45 of the said Act. This submission was upheld by the court. 19. Mr. Justice Kapadia delivering the judgment and referring to Mugneeram Bangur & Co. case (supra) and Artex Manufacturing Co. case (supra). The case was different from Artex Manufacturing Co. (supra), according to his lordship. It is now very important to know the issues before the tribunal. The first issue was whether the alleged agreement of transfer was a genu....