High Court Of Madras
CIT vs. Carburettors Ltd.
Sections 45, 48
Asst. Year 1992-93
N.V. Balasubramanian & M. Thanikachalam, JJ.
Tax Case (Appeal) No. 418 of 2000
21st June, 2004
Counsel Appeared
J. Narayanasamy, for the Appellant : V.S. Jayakumar, for the Respondent
JUDGMENT
N.V. Balasubramanian, J. :
The appeal is preferred by the Revenue against the order of the Tribunal, Madras Bench ‘A’, in ITA No.531/Mad/1996, dt. 1st Oct., 1999 for the asst. yr. 1992-93, and the same has been admitted and the following substantial question of law has been framed for consideration : ‘Whether, on the facts and in the circumstances of the case, the Tribunal is right in law and had valid materials to hold that the consideration for the purpose of computing the capital gains should be taken at Rs. 3.00 crores and that the CIT should not have directed the AO to replace Rs. 3.00 crores by Rs. 5.97 crores ?’
The brief facts necessary for the disposal of the appeal are : the respondent-company entered into an agreement with its subsidiary company M/s Ucal Components Ltd. on 18th March, 1992 and sold its manufacturing unit at Maraimalai Nagar as a going concern for a sum of Rs. 3 crores. The AO came to the conclusion that the transfer would attract the provisions of the capital gain and held a sum of Rs. 3 crores received as sale consideration would be subject to capital gains tax. The assessee has filed an appeal before the CIT(A) against the order of the assessment levying tax under the head capital gains on the ground that it was a slump sale and so the transaction did not attract the levy of tax under the head ‘capital gains’. The CIT(A) dismissed the appeal and as against the order of the CIT(A), the assessee has filed an appeal before the Tribunal and it is stated that the said appeal is pending and is likely to be taken by the Tribunal for hearing in the month of July, 2004.
The CIT, Tamil Nadu, while the appeal was pending before the CIT(A) exercised his power of revision under s. 263 of the Act and held that the sale consideration should be taken as Rs. 5.97 crores instead of Rs. 3 crores and the addition of a sum of Rs. 3 crores only as sale consideration for the purpose of levy of capital gains tax in the order of assessment was erroneous and prejudicial to the interests of the Revenue. Hence, he also passed an order of revision under s. 263 of the Act directing that the sum of Rs. 5.97 crores should be taken as sale consideration for the purpose of levy of capital gains tax. Against the order passed by the CIT under s. 263 of the Act, the assessee preferred an appeal before the Tribunal. The Tribunal rejected the contention of the assessee that the CIT has no jurisdiction under s. 263 of the Act to revise the order of assessment and upheld the jurisdiction of the CIT to invoke his revisional powers under s. 263 of the Act and the finding of the Tribunal regarding the jurisdiction of the CIT to exercise the power of revision has become final. However, the Tribunal held that the CIT, Tamil Nadu, need not have directed the AO to substitute the sum of Rs. 5.97 crores to be taken as consideration instead of Rs. 3
crores as, according to the Tribunal, the sum of Rs. 3 crores was the sale consideration received by the assessee on the sale of the business unit and allowed the appeal preferred by the assessee. The Revenue has filed an appeal challenging that part of the order of the Tribunal which is adverse to the interest of the Revenue, wherein the Tribunal held that the sale consideration should be taken as Rs. 3 crores instead of Rs. 5.97 crores for the purpose of levy of capital gains tax. This Court has admitted the appeal and the following substantial question of law has been framed for consideration : “Whether, on the facts and in the circumstances of the case, the Tribunal is right in law and had valid materials to hold that the consideration for the purpose of computing the capital gains should be taken at Rs. 3.00 crores and that the CIT should not have directed the AO to replace Rs. 3.00 crores by Rs. 5.97 crores ?”
At the time when the appeal was taken up for hearing, Mr. Jayakumar, learned counsel appearing for the assessee, submitted that the appeal filed by the assessee challenging the taxability of the sum whether it is Rs. 3 crores or Rs. 5.97 crores is pending before the Tribunal, as the assessee has challenged the order of the AO on the ground that the sale of its manufacturing unit is a slump sale and such a sale did not attract the levy of capital gains tax.
We are of the view that, since the appeal filed by the assessee challenging the levy of capital gains tax on the transfer of its manufacturing unit on the basis that it was a slump sale would not attract the levy of capital gains tax, is pending before the Tribunal on determination of the said question regarding the liability of the assessee to pay the tax on the transfer of the assets, the question regarding quantum of amount of capital gains need not be gone into. We are, therefore, of the view, the interest of justice would be met by setting aside the order of the Tribunal which is adverse to the interest of the Revenue and remit the matter to the Tribunal for fresh consideration de novo in accordance with law, and the Tribunal is directed to take both the appeals together. It is made clear since the assessee has not challenged the jurisdiction of the CIT invoking powers under s. 263 of the Act and that part of the order of the Tribunal has become final, it will not be open to the assessee to re-agitate the said question nor it will be permissible for the Tribunal to go into the said question as the said finding has become final as against the assessee.
We make it clear that the question for remand is with reference to the quantum of amount of capital gain, if it is found that the transfer of the unit by the assessee would attract the levy of capital gains tax and the Tribunal is directed to decide the question in accordance with law. We also make it clear that, since we are remitting the matter to the Tribunal, we have not decided the question on merits of the case as to the quantum of the amount of capital gains.
Accordingly, the appeal is disposed of with the direction to the Tribunal to consider the appeal preferred by the assessee against the revisional order of the CIT with other appeal said to have been preferred by the assessee challenging the levy of capital gains tax. No costs.
[Citation : 275 ITR 185]
