Whether a regular sale or a slump Sale: An issue before Bombay ITAT

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Whether a regular sale or a slump Sale: An issue before Bombay ITAT

 

ITAT MUMBAI
M/S. EMIL PHARMACEUTICAL INDUSTRIES PRIVATE LIMITED VERSUS DCIT-12 (2) (1) , MUMBAI
I.T.A. No. 3273/Mum/2019
Short Overview of the case:
 This was an issue of Capital gain of sale of asset/factory –
Issue was whether it was a regular sale or a slump sale?
 Claim of the assessee is that it has engaged into slump sale as such it is claiming that provisions of section 50C are not applicable?
There was an issue of admission of additional evidence as well.
ITAT held as under:
In the instant case what was sold was definitely not an undertaking but a factory.
CIT(A) has noted that the assessee has contended that it has produced some sale bills before the Assessing Officer and has contended that those sales to prove that the unit was running and was an ongoing business concern.
However, learned CIT(A) has noted that a few instances of sale cannot prove that production was going on. That it is quite possible that the sale was made from stock of unsold finished goods.
That the assessee did not produce the profit and loss account and the balance-sheet of the Roorkee unit in support of its claim that the production activities were continuing where the unit was sold.
Operations at Roorkee unit needs examination with relation to profit and loss account of the assessee. Here we note that in the cost of material consumed in the profit and loss account of the assessee there was no purchase of material at Roorkee Unit. So prima facie learned CIT(A)’s finding is correct that no manufacturing activity has taken place and assessee has only shown opening raw material as consumed.
We find that in the profit and loss account while closing stock of Roorkee unit shown as nil, opening stock for that year for raw material
How the financial note reflects raw material consumed clearly shows an anomaly in the preparation of a financial account.
In our considered opinion this aspect needs examination at the level of Assessing Officer.
We note that learned counsel has produced a valuation report before us giving valuation of the items sold.
This is additional evidence not produced before the authorities below. We note that this additional evidence in the shape of the valuation report itself states that as the assessee’s unit was established in a delayed manner and it was no longer eligible for incentives available there.
The valuer himself states that there are no comparative sales instances. The said report while discussing fair market rate has clearly mentioned that “we find that there was no buyer for the industrial unit, not eligible for incentive.”
This amply casts doubt over the claim of the assessee that this was a slump sale of an undertaking. It is settled law that assessees cannot be allowed to take shifting stands while it is claiming that is a sale of an undertaking it is giving evidence that there cannot be a buyer for such unit. In our considered opinion, since the authorities below have not examined this additional evidence, we deem it appropriate to remit this issue also to the file of the Assessing Officer. The Assessing Officer shall examine this issue afresh after taking into account additional evidence.- Appeal by the assessee stands allowed for statistical purposes.
Conclusion:
It is settled law that assessees cannot be allowed to take shifting stands while it is claiming that is a sale of an undertaking it is giving evidence that there cannot be a buyer for such a unit. In our considered opinion, since the authorities below have not examined this additional evidence, we deem it appropriate to remit this issue also to the file of the Assessing Officer.

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