S.K. ENTERPRISES, Ajmer V. JCIT, Ajmer

ITA 242/JPR/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4881 (ITAT-JAIPUR)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-12-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 14-03-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ROLEE AGARWAL CIT DHK
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Depreciation; Cost of acquisition; Corroborative evidences
• Section: 50C; 2(14); 32

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH HKKXPAN] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, A M VK;DJ VIHY LA-@ ITA NO. 242/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 M/S S.K. ENTERPRISES, HARI BHAU UPADHAYAY NAGAR, AJMER. CUKE VS. JCIT RANGE-1, AJMER. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAQFS 2058 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI SIDHARTH RANKA (ADV.) JKTLO DH VKSJ LS@ REVENUE BY : SMT. ROLEE AGARWAL (CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 14/11/2017 MN?KKS'K.KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 05/01/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF LD. CIT(A), AJMER DATED 29.01.2016 PERTAINING TO THE ASSESSMENT YEAR 2009-10 WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL:- UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN CONFIRMING. 1. CONSIDERING BUSINESS ASSETS AS CAPITAL ASSET, W HEREAS COMPLETE BUSINESS ASSETS, ACCOUNTS PRODUCED BEFORE AO. 2. NON CONSIDERING THE BLOCK OF BUSINESS ASSETS WITHIN THE AMBIT OF SECTION 50(2) OF THE INCOME TAX ACT, 1961. 3. NOT ADMITTING THE CLAIM OF ASSESSEE U/S 50C E.G. TH AT THE ASSET SOLD IN BUSINESS ASSET. 4. MAKING ADDITION OF RS. 3,09,29,574.00 FOR CONSIDERI NG BUSINESS ASSET SOLD AS LONG TERM CAPITAL GAIN INCOME. 2 ITA NO. 242/JP/2016. M/S S.K. ENTERPRISES, AJMER. 5. IN DISALLOWING RS. 26,278.00 BEING DEPRECIATION ON CAR BEING 20% OF EXPENSES CONSIDERED AS FOR PERSONAL USE. TH E ASSESSEE IS ALSO COVERED BY F.B.T. 6. IN DISALLOWING RS. 3,037.00 BEING 10% OF MACHINE EX PENSES CLAIMED RS. 30,365.00 AS UNVOUCHED. 7. ADDITION OF RS. 10,000.00 AS LUMSUMP FOR MISCELLANE OUS EXPENSES AS UNVOURCHER. 8. ANY OTHER MATTER WITH PRIOR PERMISSION OF THE CHAIR . 2. GROUNDS NO. 1 TO 4 ARE REGARDING THE ADDITION ON ACCOUNT OF LONG- TERM CAPITAL GAIN. THE ASSESSEE IS A PARTNERSHIP F IRM AND CARRYING ON THE BUSINESS OF RUNNING OF CINEMA HALL UNDER THE NAME O F CINE WORLD. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE SOLD ITS CINE MA HALL INCLUDING LAND, BUILDING & MACHINERY ETC. AND ALSO PURCHASE THE ANO THER BUSINESS ASSET BEING LAND. THE ASSESSEE CLAIMED THAT ASSET SOLD DURING THE YEAR IS FALLING UNDER A SPECIFIC BLOCK OF ASSETS ON WHICH DEPRECIATION WA S CLAIMED AND ALLOWED AND THEREFORE THE INCOME ARISING FROM THE SAID TRANSACT ION WOULD BE CONSIDERED IN THE TERMS OF SECTION 50(2) OF THE ACT. THE ASSESSI NG OFFICER PROPOSED TO ASSESSED THE CAPITAL GAIN ON SALE OF LAND AND APPLI ED THE PROVISION OF SECTION 50C TO ADOPT THE FULL VALUE CONSIDERATION OF THE LA ND AS PER THE VALUE DETERMINE BY THE STAMP DUTY AUTHORITY. THE ASSESSE E OBJECTED TO THE PROPOSED ASSESSMENT OF CAPITAL GAIN TO TAX AND CONT ENDED THAT IT IS A SLUMP SALE. THE ASSESSEE HAS ALSO CONTENDED THAT SINCE THE BLOCK OF ASSETS DID NOT CEASE TO EXIST AS THE ASSESSEE ALREADY PURCHASE THE LAND FORMING PART OF THE 3 ITA NO. 242/JP/2016. M/S S.K. ENTERPRISES, AJMER. SAME BLOCK OF ASSETS, THEREFORE, THE PROVISIONS OF SECTION 50C ARE NOT APPLICABLE. THE AO DID NOT ACCEPT THE CONTENTION O F THE ASSESSEE AND NOTED THAT AS PER THE REGISTERED SALE DEED DATED 01/09/20 08 THE STAMP VALUATION AUTHORITY HAS TAKEN THE VALUE OF THE SAID PROPERTY AT RS. 4,36,51,797/- AS AGAINST THE SALE CONSIDERATIONS SHOWN AT RS. 3,01,0 0,000/-. ACCORDINGLY, THE AO COMPUTED THE CAPITAL GAIN AS PER THE PROVISIONS OF SECTION 50C OF THE ACT. THE ASSESSEE CHALLENGE THE ACTION OF THE AO BEFORE THE LD. CIT(A), BUT COULD NOT SUCCEED. 2.1 BEFORE US, THE LD. AR OF THE ASSESSEE HAS SUBMI TTED THAT ASSET IN QUESTION WAS THE BUSINESS ASSET OF THE ASSESSEE AND AS PER THE PROVISION OF SECTION 50(2) IF THE BLOCK OF ASSET CEASED TO EXIST FOR THE REASONS THAT ALL THE ASSETS IN THAT BLOCK ARE TRANSFERRED DURING THE PRE VIOUS YEAR THE COST OF ACQUISITION OF THE BLOCK OF ASSETS SHALL BE THE WRI TTEN DOWN VALUE OF THE BLOCK OF ASSETS AT THE BEGINNING OF THE PREVIOUS YEAR, SU BJECT TO INCREASE BY ACTUAL COST OF ANY ASSET FALLING WITHIN THAT BLOCK OF ASSE TS, ACQUIRED BY THE ASSESSEE DURING THE PREVIOUS YEAR. THEREFORE, THE INCOME ON ACCOUNT OF SUCH TRANSFERRED SHALL BE DEEMED TO BE THE CAPITAL GAIN ARISING FROM THE TRANSFER FROM SHORT TERM CAPITAL ASSET. LD. AR HAS CONTENDED THAT WHEN THE ASSETS IN QUESTION WAS BUSINESS ASSETS AND FORMING PART OF BL OCK ASSETS AND AFTER THE TRANSFER OF THE ASSETS THE BLOCK OF ASSETS CEASE TO EXIST AND PROVISION OF SECTION 50(2) ARE APPLICABLE AND NOT THE PROVISION OF SECTION 50C OF THE ACT. 4 ITA NO. 242/JP/2016. M/S S.K. ENTERPRISES, AJMER. HE HAS FURTHER CONTENDED THAT ONCE THE CONSTRUCTION HAS BEEN PLACED ON THE PARTICULAR PIECE OF LAND, IT HAS NO SEPARATE EXISTE NCE AND BOTH LAND AND BUILDING ARE BUSINESS ASSETS SO LONG AS THEY ARE APPEARING IN BOOKS OF BUSINESS WHETHER SHOWN SEPARATELY OR TOGETHER FOR V ALUE PURPOSES. THEREFORE, SO LONG THE ASSET IS A BUSINESS ASSET I T CANNOT BE CLASSIFIED AS CAPITAL ASSET FOR THE PURPOSE OF SECTION 50C OF T HE ACT. THE EXISTENCE OF BUILDING CANNOT BE CONCEIVED WITHOUT THE LAND BENEA TH IT. THEREFORE, FOR THE PURPOSE OF COMPUTING THE CAPITAL GAIN THE LAND AND BUILDING CANNOT BE SEPARATED FROM EACH OTHER. IN SUPPORT OF HIS CONTE NTION, HE HAS RELIED UPON THE DECISION OF MADRAS HIGH COURT IN THE CASE OF CIT V/S TMI RUVEN GODAM INVESTMENT (P) LTD. 320 ITR 345. ONCE THE ASSETS IS SHOWN AS BUSINESS ASSET IN THE BALANCE-SHEET AND UNDER TH E SCHEDULE OF FIXED- ASSETS, THEN THE SALE CONSIDERATION OF THE BUSINESS ASSET IS TO BE CONSIDERED AS ACTUAL SALE VALUE AND NOT IN THE TERMS OF SECTIO N 50C OF THE INCOME TAX ACT. ALTERNATIVELY, THE LD. AR HAS SUBMITTED THAT IN ANY CASE, THE AO IS DUTY BOUND TO REFER THE MATTER TO THE D.V.O. WHEN ASSESS EE HAS OBJECTED TO THE ADOPTIONS OF THE FULL VALUE CONSIDERATION AS PER SE CTION 50C OF THE ACT. 2.2 ON THE OTHER HAND, THE LD. D/R HAS SUBMITTED TH AT AS PER THE DEFINITION OF CAPITAL ASSET U/S 2(14) OF THE ACT, IT INCLUDES PROPERTY OF ANY KIND HELD BY THE ASSESSEE, WHETHER OR NOT CONNECTED WITH HIS BUS INESS OR PROFESSION. THUS, WHEN THE LAND IN QUESTION IS NOT FALLING IN T HE EXCEPTION PROVIDED U/S 5 ITA NO. 242/JP/2016. M/S S.K. ENTERPRISES, AJMER. 2(14) OF THE ACT, THAN THE SAME IS A CAPITAL ASSET IRRESPECTIVE OF ITS CONNECTION OF THE BUSINESS OF THE ASSESSEE. FURTHER, AS PER S ECTION 48 OF THE IT ACT, THERE IS NO REFERENCE TO ANY SEPARATE CATEGORY OF BUSINESS CAPITAL ASSET AND ONLY TWO CATEGORIES OF CAPITAL ASSET ARE PROVIDED. FIRST, THE CAPITAL ASSET IN RESPECT OF WHICH DEPRECIATION HAS BEEN ALLOWED UNDE R IT ACT AND SECOND, THE CAPITAL ASSETS ON WHICH NO DEPRECIATION HAS BEEN AL LOWED. THEREFORE, THE PROVISIONS OF SECTION 50(2) ARE APPLICABLE TO THE C APITAL ASSETS IN RESPECT OF WHICH DEPRECIATION HAS BEEN ALLOWED UNDER THE IT AC T. LD. D/R HAS FURTHER SUBMITTED THAT, ADMITTEDLY, NO DEPRECIATION U/S 32 OF THE IT ACT HAS BEEN ALLOWED ON LAND SOLD BY THE ASSESSEE. THEREFORE, T HE PROVISIONS OF SECTION 50(2) ARE NOT APPLICABLE TO THE LAND SOLD BY THE AS SESSEE, EVEN IF IT IS CONSIDERED AS BUSINESS CAPITAL ASSETS. HE HAS RE LIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 2.3 WE HAVE CONSIDERED THE RIVAL CONTENTIONS, AS WE LL AS RELEVANT MATERIALS ON RECORD. THE MAIN CONTENTION OF LD. A/R OF THE AS SESSEE AGAINST THE APPLICABILITY OF SECTION 50C IS THAT THE ASSET IN Q UESTION IS A BUSINESS AND THEREFORE THE PROVISION OF SECTION 50(2) ARE APPLIC ABLE AND THE ACTUAL SALE CONSIDERATION HAS TO BE CONSIDERED FOR THE PURPOSE OF COMPUTING THE CAPITAL GAIN. THERE IS NO DISPUTE THAT THE LAND IN QUESTIO N IS NOT A DEPRECIABLE ASSET AND THEREFORE TO THE EXTENT TO SALE OF LAND THE PRO VISION OF SECTION 50(2) ARE NOT APPLICABLE. AS REGARDS THE OBJECTIONS AGAINST TREATING THE LAND AND 6 ITA NO. 242/JP/2016. M/S S.K. ENTERPRISES, AJMER. BUILDING AS CAPITAL ASSET WE FIND THAT AS PER THE D EFINITION PROVIDED U/S 2(14) OF THE ACT A PROPERTY OF ANY KIND HELD BY AN ASSESS EE, WHETHER OR NOT CONNECTED WITH HIS BUSINESS OR PROFESSION, WILL BE CONSIDERED AS CAPITAL ASSETS. SECTION 2(14) HAS ALSO PROVIDED CERTAIN ASSETS WHIC H ARE EXCLUDED FROM THE DEFINITIONS OF THE CAPITAL ASSETS SUCH AS STOCK-IN- TRADE, CONSUMABLE STORES OR RAW MATERIALS HELD FOR THE PURPOSES OF BUSINESS OR PROFESSION AS WELL AS PERSONAL EFFECTS, MOVABLE PROPERTY HELD FOR PERSONA L USE BY THE ASSESSEE OR ANY MEMBER OF HIS FAMILY. THEREFORE, IT MAKES NO D IFFERENCE WHETHER A PARTICULAR PROPERTY IS HELD BY THE ASSESSEE FOR BUS INESS PURPOSE OR NOT. IF IT IS A PROPERTY WHICH IS NOT FALLING IN THE EXCLUSIONS, THEN IT IS A CAPITAL ASSET. 2.4 AS REGARDS THE APPLICABILITY OF THE SECTION 50C WE FIND THAT WHEN THE LAND IS NOT DEPRECIABLE ASSET AND THE STAMP DUTY AU THORITY HAS ADOPTED THE VALUE OF LAND AT RS. 4,36,51,797/-, THEN THERE IS N O EMBARGO IN APPLYING THE PROVISIONS OF SECTION 50C OF THE ACT. THIS SECTION STIPULATES THE DEEMING PROVISIONS AS THE VALUE ADOPTED BY THE STAMP VALUAT ION AUTHORITY WILL BE DEEM TO BE FULL VALUE CONSIDERATION OF THE CAPITAL ASSET. THEREFORE, THERE IS NO LEGAL IMPEDIMENT AGAINST APPLICATION OF SECTION 50C OF THE ACT, SO FAR AS THE VALUATION OF LAND IN QUESTIONS IS CONCERN. SINCE, THE LAND IS NOT DEPRECIABLE ASSET, THEREFORE, ALL THE BENEFITS AVAILABLE FOR CO MPUTATION OF CAPITAL GAIN INCLUDING INDEXATION COST ARE TO BE ALLOWED TO THE ASSESSEE. FURTHER, THE ASSESSEE RAISED OBJECTIONS AGAINST THE VALUE AS DET ERMINE BY THE STAMP 7 ITA NO. 242/JP/2016. M/S S.K. ENTERPRISES, AJMER. VALUATION AUTHORITY AS FULL VALUE CONSIDERATION. T HEREFORE, THE AO OUGHT TO HAVE REFERRED THE VALUATION OF THE PROPERTY TO BE D .V.O. AS PER THE PROVISIONS OF SECTION 50C(2) OF THE ACT. ACCORDINGLY, THE ISSU E OF VALUATION OF THE PROPERTY IS SET ASIDE TO THE RECORD OF AO TO BE DET ERMINED AS PER THE PROVISION OF SECTION 50C(2) OF THE ACT. 2.5 THE ASSESSEE ALSO RAISED THE CONTENTION THAT TH E SALE IN QUESTION IS A SLUMP SALE. THIS OBJECTION WAS ALSO RAISED BY THE ASSESSEE BEFORE THE LD. CIT(A), HOWEVER, THE LD. CIT(A) AFTER CONSIDERING T HE FACTS AND RELEVANT PROVISIONS OF SECTION 50B HAS HELD THAT THE TRANSAC TION OF TRANSFER OF PROPERTY IN QUESTION DOES NOT FALL IN THE AMBIT OF SAID PROV ISIONS BEING SLUMP SALE. THE RELEVANT FINDING OF THE LD. CIT(A) IS AS UNDER:- A COMBINED READING OF SALE DEED, BALANCE SHEET DA TED 31.03.2008, BALANCE SHEET DATED 31.03.2009 AND SCHEDULE OF FIXE D ASSETS TO THE BALANCE SHEET DATED 31.03.2009, MAKES IT VERY CLEAR THAT THE ASSESSEE HAS NOT TRANSFERRED ALL THE ASSETS AND LIABILITY OF THE BUSINESS. NO LIABILITY AT ALL HAVE BEEN TRANSFERRED AND ONLY PAR T OF THE ASSETS HAVE BEEN TRANSFERRED. THE TRANSFERS MADE BY THE APPELL ANT IS NOT A BUSINESS ACTIVITY TAKEN AS A WHOLE. THEREFORE, T HE ASSET SOLD BY THE APPELLANT DOES NOT CONSTITUTE SLUMP SALE AS DEFIN ED U/S 2(42)C R.W. EXPLANATION 1 TO SECTION 2(19)AA. IF THE PROVISIONS OF SECTION 50B ARE READ CAREFULLY , IT WOULD BE CLEAR THAT UNDER THE PROVISIONS OF THIS SECTION ALSO, THE ASSE SSEE IS REQUIRED TO TRANSFER TOTAL ASSETS AND LIABILITY OF THE UNDERTAK ING OR DIVISION AS APPEARING IN ITS BOOKS OF ACCOUNTS BECAUSE SUB SECT ION 2 OF SECTION 50B PROVIDES THAT IN RELATION TO CAPITAL ASSETS BEING A N UNDERTAKING OR 8 ITA NO. 242/JP/2016. M/S S.K. ENTERPRISES, AJMER. DIVISION TRANSFERRED BY WAY OF SUCH SALE, THE 'NET WORTH' OF THE UNDERTAKING OR THE DIVISION, AS THE CASE MAY BE, SH ALL BE DEEMED TO BE THE COST OF ACQUISITION AND THE COST OF IMPROVEMENT FOR THE PURPOSES OF SECTIONS 48 AND 49. EXPLANATION 1 TO SECTION 50B EXPLAINS HOW,,FOR THE PURPOSE OF SECTION 50B NET WORTH SHALL BE COMPUTED. ACCORDING TO EXPLA NATION 1, NET WORTH SHALL BE THE AGGREGATE VALUE OF TOTAL ASSETS OF THE UNDERTAKING OR DIVISION AS REDUCED BY THE LIABILITIES OF SUCH UNDE RTAKING OR DIVISION AS APPEARING IN ITS BOOKS OF ACCOUNTS . AS PER SUB-SECTION 2, 'NET WORTH' OF UNDERTAKING IS THE COST OF ACQUISITION AN D COST OF IMPROVEMENT OF THE CAPITAL ASSET BEING AN UNDERTAKI NG OR DIVISION TRANSFERRED AND THE NET WORTH IS AS DEFINED IN EXPL ANATION 1 IS AGGREGATE VALUE OF TOTAL ASSETS OF THE UNDERTAKING OR DIVISION AS REDUCED BY THE VALUE OF THE LIABILITIES OF SUCH UNDERTAKING OR DIVISION AS APPEARING IN ITS BOOKS OF ACCOUNTS . THUS, IT IS CLEAR THAT FOR THE PURPOSE OF COMPUTING CAPITAL U/S 50B, VALUE OF TOTA L ASSETS OF THE UNDERTAKING AND VALUE OF THE LIABILITIES OF THE UND ERTAKING HAS TO BE TAKEN INTO ACCOUNT AND NOT THE VALUE OF ONLY THE PA RT OF ASSETS TRANSFERRED BY THE ASSESSEE IGNORING THE VALUES OF LIABILITIES AND OTHER ASSETS AS APPEARING IN THE BOOKS OF ACCOUNTS. AFTER READING THE PROVISIONS OF SECTION 50B, 2(42)C AND EXPLANATION 1 TO 2(19)AA TOGETHER, I AM OF THE CONSIDERED VIEW THAT, IF THE ASSESSEE TRANSFERS ALL THE ASSETS AND LIABILITIES OF AN UNDE RTAKING, TAKEN BUSINESS ACTIVITY AS A WHOLE, THEN ONLY IT SHALL CONSTITUTE 'SLUMP SALE' AS DEFINED U/S 2(42)C AND PROVISIONS OF SECTION 50B SHALL BE A PPLICABLE ONLY TO SUCH TRANSFER. AS THE CASE UNDER CONSIDERATION, THE ASSESSEE HAS NOT TRANSFERRED TOTAL ASSETS AND LIABILITIES AS APPEARI NG IN THE BOOKS OF ACCOUNTS, TAKEN BUSINESS ACTIVITY AS A WHOLE, THERE FORE, I AM OF THE 9 ITA NO. 242/JP/2016. M/S S.K. ENTERPRISES, AJMER. CONSIDERED VIEW THAT TRANSFER OF THE ASSETS MADE BY THE APPELLANT IS NOT 'SLUMP SALE' AND THE PROVISIONS OF SECTION 50B ARE NOT APPLICABLE TO THE TRANSFERS OF ASSETS MADE BY THE APPELLANT. FURTHER, UNDER SUB-SECTION 3 OF SECTION 50B, THE AS SESSEE WAS REQUIRED TO FURNISH AUDITORS REPORT IN FORM NO. CEA ALONG WI TH THE RETURN OF INCOME INDICATING THE COMPUTATION OF 'NET WORTH' OF UNDERTAKING OR DIVISION, AS THE CASE MAY BE AND CERTIFYING THAT NE T WORTH OF THE UNDERTAKING OR DIVISION AS THE CASE MAY BE, HAS BEE N CORRECTLY ARRIVED AT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 50B . THE ASSESSEE HAS NOT FURNISHED ANY SUCH AUDIT REPORT IN FORM NO. 3CE A ALONG WITH THE RETURN OF INCOME, THEREFORE ALSO IT IS HELD THAT PR OVISIONS OF SECTION 50B ARE NOT APPLICABLE TO THE TRANSFER OF ASSETS MADE B Y THE APPELLANT. ALONG WITH WRITTEN SUBMISSIONS FILED ON 10.12.2015, THE APPELLANT HAS ALSO FILED A REPORT IN FORM NO. 3CEA. IT IS SEEN TH AT THE 'NET WORTH OF UNDERTAKING COMPUTED BY THE AUDITOR IN THE REPORT I S NOT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 50B BECAUSE IN CLAUS E (D) OF PARA 6 (VALUE OF THE LIABILITY RELATABLE TO THE UNDERTAKING OR DI VISION AS APPEARING IN THE ,BOOKS OF ACCOUNTS), THE AUDITOR HAS MENTIONED 'NIL', WHEREAS HE WAS REQUIRED TO REPORT THE VALUE OF LIABILITIES AS APPEARING IN BOOKS OF ACCOUNTS. IN CLAUSE (B) (IN THE CASE OF OTHER ASSET S; BOOK VALUE OF SUCH 'ASSETS) ALSO, THE AUDITOR HAS NOT GIVEN TOTAL BOOK VALUE OF THE TOTAL ASSETS. THUS IT IS HELD THAT THE NET WORTH REPORTED BY THE AUDITOR HAS NOT BEEN CORRECTLY ARRIVED AT IN ACCORDANCE WITH TH E PROVISIONS OF SECTION 50B. IN VIEW OF THE FACTS DISCUSSED ABOVE, THE CLAIM OF THE APPELLANT THAT THE PROVISIONS OF SECTION 50B ARE APPLICABLE TO THE ASS ETS TRANSFERRED BY IT, IS ALSO REJECTED. 10 ITA NO. 242/JP/2016. M/S S.K. ENTERPRISES, AJMER. IT IS CLEAR THAT AS PER THE BALANCE SHEET OF THE AS SESSEE AS ON 31/03/2008 AS WELL AS ON 31/03/2009, THE ASSESSEE HAS NOT TRANSFE RRED ALL THESE ASSET AND LIABILITY OF THE BUSINESS AND CONSEQUENTLY THE SALE IN QUESTION WOULD NOT CONSTITUTE THE SLUMP SALE. AS PER EXPLANATION TO S UB SECTION 1 OF SECTION 50B THE NET WORTH IS COMPUTED BY TAKING THE AGGREGATE V ALUE OF TOTAL ASSETS OF THE UNDERTAKING OR DIVISION AS REDUCED BY THE LIABILITY OF SUCH UNDERTAKINGS OR DIVISION. HOWEVER, THE ASSESSEE HAS NOT SOLD OR TR ANSFERRED A PARTICULAR UNDERTAKING OR DIVISION BUT HAS TRANSFERRED ONLY AS SET COMPRISING OF LAND OR BUILDING WITHOUT TRANSFERRED OF ANY LIABILITY OF TH E UNDERTAKING OR DIVISION. THEREFORE, WE DO NOT FIND ANY ERROR OR ILLEGALITY I N THE IMPUGNED ORDER OF THE LD. CIT(A) QUA THIS ISSUE. 3. GROUND NO. 5 TO 7 ARE REGARDING DISALLOWANCE OF DEPRECIATION ON CAR, MACHINE EXPENSES AND MISCELLANEOUS EXPENSES. 3.1 WE HAVE HEARD THE LD. AR AS WELL AS LD. D/R AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE ASSESSING OFFICER DISALLOWED 20% OF THE CAR DEPRECIATION AND FURTHER 10% OF THE MACHINE EXPENSE S AS WELL AS ADDITION OF RS. 10,000/- ON ACCOUNT OF MISCELLANEOUS EXPENSES. THE DEPRECIATION ON CAR WAS DISALLOWED BY THE AO ON THE GROUND OF PERSONAL USE WHEREAS THE EXPENSES ON MACHINERY WERE DISALLOWED TO THE EXTENT OF 10% AS FOR WANT OF PROPER VOUCHERS AND SUPPORTING EVIDENCE. SIMILARLY , THE AO HAS MADE A LUMP SUM ADDITION OF RS. 10,000/- IN RESPECT OF MISCELLA NEOUS EXPENSES FOR WANT OF 11 ITA NO. 242/JP/2016. M/S S.K. ENTERPRISES, AJMER. VOUCHERS AND SUPPORTING EVIDENCE AS THE ASSESSEE PR ODUCE SELF MADE VOUCHERS. LD. THE CIT(A) CONFIRMED THE DISALLOWANC E MADE BY THE AO. 3.2 THE ASSESSEE IS IN PARTNERSHIP FIRM, THEREFORE, AS FAR AS THE DISALLOWANCE ON DEPRECIATION ON CAR IS CONCERNED IT IS NOT IN THE CONTROL OF ONE PERSON TO USE THE CAR AND THEREFORE THE DISALLOWANC E MADE BY THE AO ON ACCOUNT OF DEPRECIATION IS ONLY ON ASSUMPTION OF PE RSONAL USE WITHOUT ANY BASIS. ACCORDINGLY, THE SAID DISALLOWANCE OF DEPRE CIATION ON CAR IS DELETED. AS REGARDS THE DISALLOWANCE OF 10% OF MACHINERY EXPENS ES AS WELL AS MISCELLANEOUS EXPENSES, WE FIND THAT THE ASSESSEE H AS NOT PRODUCED ANY SUPPORTING VOUCHERS. THEREFORE THE 10% DISALLOWANC E AND ANOTHER LUMP SUM DISALLOWANCE OF 10,000/- IN RESPECT OF MISCELLANEOU S EXPENSES IS PROPER AND REASONABLE. HENCE, THIS DISALLOWANCE ON ACCOUNT OF MACHINE EXPENSES AND MISCELLANEOUS EXPENSES IS CONFIRMED. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05/01/2018. SD/- SD/- HKKXPAN FOT; IKY JKO (BHAGCHAND) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 05/01/2018. POOJA/- VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S S.K. ENTERPRISES, AJMER. 2. IZR;FKHZ@ THE RESPONDENT- JCIT, RANGE-1, AJMER. 3. VK;DJ VK;QDR@ CIT 12 ITA NO. 242/JP/2016. M/S S.K. ENTERPRISES, AJMER. 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE [ITA NO. 242/JP/2016] VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR