TaxTMI 
TaxTMI 
2000 (8) TMI 233
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....nce-sheet of the proprietary concern as on 31-8-1992 and worked out the surplus realised on the fixed assets at Rs.48,35,773 and disclosed the same as long-term capital gains in the return filed on 31-10-1993. The amount of capital gains in the computation sheet has been worked out by the assessee as under:- --------------------------------------------------------------------------- Total realisation for the sale of Mahavir Rolling Mill 86,21,000 Less: Towards net current assets-- Total assets (except fixed assets) 2,81,63,224 Less: Total liabilities 2,71,95,415 9,67,809  ....
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....in the books. Subsequently, however, the assessee vide letter dated 28-2-1996 filed towards the close of the assessment proceedings requested the Assessing Officer that though in the return income has been declared as long-term capital gains on the sale of the undertaking, income from the sale be treated as NIL. The assessee, however, did not file any revised return. The Assessing Officer observed that the computation of surplus by the assessee in the computation sheet enclosed with the return clearly reveals that the surplus has arisen on account of fixed assets i.e. block of assets of the proprietary concern and the excess over the written down value of the block of assets worked by the assessee himself at Rs.48,35,773 is liable to be assessed as short-term capital gains under section 50(2) of the Income-tax Act. 3. In appeal, the ld. CIT(A) upheld the action of the Assessing Officer and held that surplus realised on the sale of block of assets is liable to be treated as short-term capital gains under section 50(2) of the Act. However, the Id. CIT(A) directed the Assessing Officer to verify the assessee's contention regarding those assets on which no depreciation has been clai....
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.... is a special provision for computation of capital gains in case of depreciable assets and surplus realised on the sale of block of assets has been rightly assessed by the Assessing Officer as short-term capital gains. 6. We have carefully considered the rival submissions and also gone through the judicial authorities cited before us. From the facts on record as indicated hereinbefore it is evidently clear that the surplus realisation on the sale of proprietary business worked out by the assessee at Rs.48,35,773 is attributable to block of assets covered under section 50(2) of the Act. The working has been given by the assessee by way of computation sheet enclosed with the return and the surplus amount of Rs.48,35,773 has been disclosed as long-term capital gain. As per assessee's own computation the current assets and current liabilities reflected in the books of the unit as on 31-8-1992 are Rs.2,81,63,224 and Rs.2,71,95,415 respectively. Thus excess of current assets over the current liabilities works out to Rs.9,67,809. This excess attributable to current assets and current liabilities has been deducted from the total sale realisation of Rs.86,21,000 and the balance comes to ....
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....ident that the amount of Rs.11,50,400 had been arrived at by taking into consideration the value of the plant and machinery and dead stock as asset by the valuer at Rs.15,87,296. On these facts, the Hon'ble Supreme Court observed at p. 276-- "This is not a case in which it cannot be said that the price attributed to the items transferred is not indicated and, hence section 41(2) of the 1961 Act cannot be applied. We are, therefore, unable to agree with the view of the High Court that section 41(2) of the 1961 Act is not applicable." We feel that the facts of the instant case before us stand on a much stronger footing inasmuch as in the present case before us, the assessee himself provided the computation of surplus realised on the sale of fixed assets of business, as reflected in the balance sheet on the date of sale. In our opinion, the surplus amount resulting from the transfer of fixed assets is liable to be assessed as long-term capital gains under section 50(2) of the Act in view of Artex Mfg. Co.'s case. 8. Since the view being taken by us is directly supported by the decision of Hon'ble Supreme Court in Artex Mfg. Co.'s case, we do not consider it necessary to consi....