TaxTMI 
TaxTMI 
2009 (2) TMI 92
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....ndum of appeal in paragraph no.7, two questions have been proposed by the appellant when the Tax Appeal was filed, and it should mean that at the time of admission, the appeal has been admitted on the questions so proposed and the said questions are deemed to have been formulated by the High Court, hence the appeal should be heard on merits of the questions so formulated. Alternatively, it was submitted that it was open to the Court to formulate any other question which the Court feels is required to be determined. The two proposed questions read as under: "(1) Whether, the Appellate Tribunal is right in law and on facts in holding that the amount of Rs.50 lacs received by the assessee was by way of transfer of its goodwill and not profit on stock as well as fixed assets as held by the Assessing Officer and confirmed by the Commissioner of Income Tax (appeal)?. (2) Whether, the Appellate Tribunal ought not to have appreciated that in the facts and circumstances of the case there was transfer of business which attracted capital gains as held by the Hon'ble Supreme Court in the case of CIT v/s Artex Manufacturing Company 227 ITR 260.?" 3. On behalf of respondent Assessee, le....
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....s which ought to have been charged on the closing stock and the fixed assets which were valued at book value. 7. When the matter was carried in appeal before Commissioner (Appeals), the addition was confirmed by Commissioner (Appeals) in the second round on altogether different grounds, and the said reasons have been summarized by the Tribunal in its impugned order dated 8/10/1998 in the following manner: (i) Portion of Rs.12 lakhs (profits at 15% of finished goods) was business profit of the appellant trust. Reliance was placed on 189 ITR 285. (ii) Remaining sum of Rs.38 lakhs represented profit earned by the appellant not on account of transfer of any goodwill but on account of transfer of facility which was enjoying for using the brand name of NIRMA. (iii) Alternatively he held that it represented part of consolidated consideration which has been received by the appellant for transfer of its business as a whole as a gong concern and accordingly would be assessable as short term capital gain. 8. It is against the aforesaid order made by Commissioner (Appeals) on 25/9/1992 that the matter came up before the Tribunal. The Tribunal has for the reasons stated in the im....
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....e facts and evidence on record, including the agreement entered into between the parties, the orders made by, including order of Assessing Officer and Commissioner (Appeals) in both the rounds; and after considering the submissions made by both the sides, the Tribunal has made the order impugned. It was further submitted that the second contention that the Tribunal had not given any reason for disagreeing with the view expressed by Commissioner (Appeals) was also not correct, in as much as, the Tribunal has specifically summarized the findings recorded by Commissioner (Appeals) and thereafter gone on to observe that the sum of Rs.50=00 lakhs was received towards transfer of goodwill only. 9.1. On merits, it was submitted that Revenue was not disputing the receipt of sum of Rs.50=00 lakhs. That, both the Assessing Officer and Commissioner (Appeals) had bifurcated said sum of Rs.50=00 lakhs towards the stock-in-trade and the other assets of the business, and the Commissioner (Appeals) had also in the alternative allocated sum of Rs.38=00 lakhs, over & above Rs.12=00 lakhs allocated to stock-in-trade, towards transfer of business as a whole. That, such an exercise could not have be....
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....ppellant had valued the stock on generally accepted method of valuation of stock which have been followed by the assessee and other assessees of Nirma Group. It was specifically stipulated in the agreement that apart from the price of the assets under book value the purchaser had to pay Rs. 50 lacs for goodwill. Accordingly the aforesaid payment of Rs.50 lakhs was made in respect of the goodwill. The price was fixed by mutual negotiation. The purchaser has debited the amount to its books of accounts which has been accepted by the department. The assessee has filed the deed of transfer along with the paper book which was considered by the A.O. while passing the order." 12. The Tribunal has thereafter referred to the Apex Court decision in the case of Srinivasa Setty (supra) and applied the principles of the said decision to the facts of the case. 13. When one reads the order of the Tribunal as a whole, it becomes apparent that not only there is application of mind but the Tribunal has taken into consideration the entire set of facts, circumstances, and evidence on record. The agreement entered into by the parties on 7/4/1984 stipulates taking over the business as a going conce....
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.... proposition. There is no prescribed mode & manner of negotiations. Therefore, absence of any correspondence in this regard per se cannot be treated to be an adverse factor. In this context, it is necessary to note that the debit of the amount of Rs.50=00 lakhs by the purchaser of the business in its books of accounts is not doubted and in fact the Tribunal has found that the same has been accepted by the Department as 'purchase price'. Therefore, if the same transaction has been found to be a genuine transaction, treated as such in the hands of the purchaser, there is no reason why a different consideration should prevail in hands of the seller. 17. In fact when one goes to the orders made by the Assessing Officer and Commissioner (Appeals), it becomes clear that the said authorities have merely worked out the value of the closing stock by adopting a profit rate of 15% on an assumption, as can be seen from the following paragraph in the order of Commissioner (Appeals):- "If a profit rate of 15% is assumed the finished goods of the cost of Rs.65.71 lacs would be sold for Rs.77.30 lacs with the result that the profit would be quantified at Rs.11.59 lacs. Presuming that the cos....