By Jagdish D. Shah, Jagdish T. Punjabi, Chartered Accountants
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Part B — Unreported Decisions
(Full texts of the following Tribunal decisions are available
at the Society’s office on written request. For members desiring that the
Society mails a copy to them, Rs.30 per decision will be charged for
photocopying and postage.)
25 Accelerated Freeze Drying Co. Ltd.
v. DCIT
ITAT Cochin
Before N. Barathvaja Sankar (AM) and
N. Vijayakumaran (JM)
ITA No. 611/Coch/08
A.Y. : 2002-03. Decided on : 5-12-2008
Counsel for assessee/revenue : R. Sreenivasan/
V. M. Thyagarajan
S. 50 and S. 50B of the Income-tax Act, 1961 — Sale of
depreciable assets or slump sales — Sale of two manufacturing units along with
immovables and movables — Consideration for both the units was based on the
individual value of each of the lands, buildings and plant and machinery ––
Whether the sale of these two units was covered by S. 50 and not by S. 50B —
Held, Yes.
Per N. Vijayakumaran :
Facts :
The assessee is engaged in the business of processing frozen
foods. During the relevant assessment year, the assessee sold two of its units
for valuable considerations. Both the units were sold to two different buyers
and the consideration for both the units was arrived at based on the separate
valuations done for land, building and each of the items of plant and machinery.
The assessee regarded these transactions as sale of depreciable assets as per
provisions of S. 50 of the Act. The Assessing Officer by way of reassessment
u/s.148, brought these amounts to tax as slump sale within the meaning of S. 50B
of the Act. Aggrieved, the assessee preferred an appeal to the CIT(A) who upheld
the action of the AO. Aggrieved by the order of the CIT(A), the assessee
preferred an appeal to the Tribunal.
Held :
The Tribunal observed that there is ample evidence which
shows that there is bifurcation of sale profits, splitting up of the value
between movable and immovable assets and the assets are depreciable assets. The
Tribunal held that this is a case where S. 50 is squarely applicable. It is not
the aggregate value taken as the net worth for the purpose of application of
slump sale provision as u/s.50B. The Tribunal found the decision of the Cochin
Tribunal in the case of International Creative Foods P. Ltd. to be squarely
applicable to the facts of the case. Accordingly, the Tribunal set aside the
order of the authorities below and following the decision of the Cochin Tribunal
in the case of International Creative Foods P. Ltd. allowed the claim of the
assessee.
Cases referred to :
ACIT v. International Creative Foods P. Ltd., ITA Nos.
227/Coch./2006 and 447/Coch./2007, dated 10-9-2008.
