The ACIT, Ernakulam V. M/s.Ootty Gate Hotel, Angamally, Ernakulam

ITA 384/COCH/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4252 (ITAT-COCHIN)
• Duration Of Justice: 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 31-07-2018
• Assessment Year: 2013-2014
• Appeal Filed On: 21-08-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: BINDHU A S
• Assessee Lawyers: K P PAULSON
• Keywords: Capital asset; Business income; Depreciation; Cost of acquisition; Valuation report
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI CHANDRA POOJAR I, AM & SHRI GEORGE GEORGE K, JM ITA NO. 384 /COCH/201 7 : ASST.YEAR 201 3 - 201 4 THE ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 1 NON - CORPORATE KOCHI. VS. M/S. OOTY GATE HOTEL C/O.DAVIS KURIAKOSE PATHADAN HOUSE NAYATHODE, ANGAMALY . PAN : AABFO6868R . (APPELLANT) (RESPONDENT) APPELLANT BY : SMT.BINDHU A.S. RESPONDENT BY : SRI.K.P.PAULSON DATE OF HEARING : 01 .08.2018 DATE OF PRONOUNCEMENT : 14 .08.2018 O R D E R PER CHANDRA POOJARI, AM THIS APPEAL AT THE INSTANCE OF THE REVENUE IS DIRECTED AGAINST THE CIT(A) S ORDER DATED 25.05.2017 . THE RELEVANT ASSESSMENT YEAR IS 201 3 - 201 4 . 2. THE GROUNDS RAISED READ AS FOLLOWS: - 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS - II), KOCHI, IN ITA NO.1014NC/CIR - 1(1)/CIT(A) - II/15 - 16 DATED 25.05.2017, IS OPPOSED TO LAW, FACTS AND CIRCUMSTANCES OF THE CASE. 2. WHETHER THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WAS RIGHT IN ALLOWING THE ASSESSEES APPEAL HOLDING THAT THE ASSESSEE ONLY SOLD THE LAND AND BUILDING OF THE HOTEL. SEPARATE CONSIDERATIONS WERE ASSIGNED AND RECEIVED FOR THE SAME. OTHER ASSETS AND LIABILITIES WERE NOT SOLD AT ALL. ITA NO. 384 / COCH /201 7. M/S. OOTY GATE HOTEL . 2 3. CIT(A) OUGHT TO HAVE UPHELD THE FACT THAT THE PLANT & MACHINER Y, GOOD WILL ETC HAVE NOT BEEN VALUED AND THE ENTIRE BUSINESS IS TRANSFERRED AS A GOING CONCERN. 4. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS REQUESTED THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) MAY BE SE T ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE AS FOLLOWS: 3.1 THE ASSESSEE IS A FIRM, ENGAGED IN THE BUSINESS OF RUNNING A HOTEL AT OOTY. DURING THE RELEVANT ASSESSMENT YEAR, IT HAD SOLD ITS HOTEL PREMISES AT OOTY OF LAND AND BUILDING TOGETHER AS A WHOLE TO ONE M/S.BKR HOTELS & RESORTS PRIVATE LIMITED FOR A TOTAL CON SIDERATION OF RS.20 CRORE, VIDE SALE DEED EXECUTED ON 18.01.2013. THE ASSESSING OFFICER VIDE ORDER DATED 19.02.2016 PASSED U/S 143(3) OF THE I.T.ACT, CONSIDERED THE SALE AS A ` SLUMP SALE AND INVOKED THE PROVISIONS OF SECTION 50B OF THE I.T.ACT. THE RELEVA NT OBSERVATION OF THE ASSESSING OFFICER IN DOING SO, READS AS FOLLOWS: - SLUMP SALE CAPITAL GAIN 2.1 THE ASSESSEE WAS ENGAGED IN HOTEL BUSINESS UNDER THE NAME AND STYLE OF M/S.OOTY GATE HOTEL AT UDHAGAMANDALAM (POPULARLY KNOWN AS OOTY), TAMIL NADU. TH E ASSESSEE FIRM COMPRISED OF THREE PARTNERS NAMELY (1) SHRI SHEO PAUL (2) SHRI DAVIS KURIAKOSE AND (3) SHRI THANKACHAN. IT IS SEEN FROM RECORDS THAT THE ASSESSEE HAD SOLD ITS ONLY HOTEL PREMISES AT OOTY OF BOTH LAND & BUILDING TOGETHER AS A WHOLE TO ONE M/S.BKR HOTELS & RESORTS PVT. LTD. (PAN NO.AADCB0450B] 9 VENKATESAN STREET, T.NAGAR, CHENNAI 600 017 FOR A CONSIDERATION OF RS.20,00,00,000/ - VIDE SALE EXECUTED ON 18.01.2013 ITA NO. 384 / COCH /201 7. M/S. OOTY GATE HOTEL . 3 BEFORE THE SUB - REGISTRAR, UDHAGAMANDALAM JOINT - 1, NILG IRIS, TAMIL NADU. ON PERUSAL OF THE SALE DEED, CONSIDERATION PAID FOR LAND FOUND VALUED AT RS.13,86,52,000/ - AND BUILDING VALUED FOR RS.6,13,48,000/ - . HOWEVER, ON PERUSAL OF STATEMENT OF TOTAL INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION, IT IS NOTICED THAT THE ASSESSEE ADMITTED CAPITAL GAIN ON OF THE HOTEL PREMISES IN THE FOLLOWING MANNER : PARTICULARS AMOUNT IN RS. AMOUNT IN RS. SALE CONSIDERATION DATED 18.01.2013 FOR LAND 138652000 FOR BUILDING 50348000 FOR BUSINESS 11000000* 20,00,00,000 LONG TERM CAPITAL GAIN ON LAND PORTION SALE CONSIDERATION 13,86,52,000 ACQUISITION DETAILS F.Y.2007 - 2008 17004000 PURCHASE COST 17004000X852/551 2,62,92,936 CAPITAL GAIN LTCC 11,23,59,064 SHORT TERM CAPITAL GAIN ON BUILDING PORTION SALE CONSIDERATION 5,03,48,000 COST OF ACQUISITION 31538299 3,15,38,299 CAPITAL GAIN LTCC 1,88,09,701 2. 2 THE ASSESSEE VALUED A SUM OF RS.1.10* CRORE AS VALUE FOR BUSINESS, OUT OF TOTAL CONSIDERATION OF RS.20 CRORES AND OFFERED THE SAME UNDER THE BUSINESS HEAD. THE BALANCE CONSIDERATION OF RS.19.90 CRORES WAS APPORTIONED TOWARDS LAND AND BUILDING AND OFFERED U NDER THE HEAD CAPITAL GAIN AS LONG TERM CAPITAL GAIN AND SHORT TERM CAPITAL GAIN RESPECTIVELY AFTER CLAIMING INDEXATION FOR LAND PORTION. LATER COMPUTING THE INCOME UNDER THE HEAD BUSINESS AND CAPITAL GAIN SEPARATELY, THE ASSESSEE ADJUSTED BROUGHT FORWARD LOSS OF RS.2.66 CRORES. AS A RESULT OF THE ABOVE COMPUTATION, THE ASSESSEES TOTAL INCOME FOUND REPORTED AT RS.11,49,71,882/ - THOUGH THE ITA NO. 384 / COCH /201 7. M/S. OOTY GATE HOTEL . 4 ASSESSEE HAD RECEIVED A HOPPING SUM OF RS.20,00,00,000/ - FOR SALE OF ONLY INCOME GENERATING ASSETS IN HOTEL BUSINESS PR EMISES. FOR SALE OF CLARITY THE ASSESSEES CALCULATION OF TOTAL INCOME OF RS.11,49,71,882/ - IS GIVEN AS UNDER: - S. NO. PARTICULARS AMOUNT (RS.) AMOUNT (RS.) 1. NET PROFIT BEFORE TAX AS PER PROFIT AND LOSS ACCOUNT INCLUDING LTCG & STCG 15,08,10,187 2. ADD : IN ADMISSIBLE AS REPORTED BY THE ASSESSEE 74,500 15,08,84,687 3. LESS : INCOME CONSIDERED SEPARATELY (RELATING TO LTCG + STCG) 14,04,57,701 4. INCOME CHARGEABLE UNDER THE HEAD BUSINESS 1,04,26,986 1,04,26,986 5. INCOME FROM CAPITAL GAIN 5.1 LTCG ON LAND (REFER TABLE NO.1) 11,23,59,064 5.2 STCG ON BUILDING (REFER TABLE NO.1) 1,88,09,701 INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAIN 13,11,68,765 6 LESS : BROUGHT FORWARD LOSSES ADJUSTED 2,66,23,869 7. TOTAL INCOME AS PER ASSESSEES COMPUTATION 11,49,71,881 2 .3 DURING THE COURSE OF SCRUTINY PROCEEDINGS, THE ASSESSEE WAS ASKED TO JUSTIFY THE VALUATION OF BUSINESS AT A VALUE FO RS.1,10,00,000/ - . IN REPLY, THE ASSESSEES AR STATED THAT THE SUM OF RS.1.10 CRORES ITA NO. 384 / COCH /201 7. M/S. OOTY GATE HOTEL . 5 IS CONSIDERED AS BUSINESS VALUE BECAUSE THE TOTAL BUSINESS WAS SOLD TO BUYERS. AS THE TOTAL BUSINESS WAS SOLD, THE AR WAS ASKED TO CLARIFY THE BASIS FOR VALUATION OF THE BUSINESS AT RS.1.10 CRORES. THE A R. REPLIED THAT AFTER CONSIDERING THE RUNNING LOSS A ND CARRY TOW ARDS LOSSES, THE VALUE OF BUSINESS WAS COMPUTED AT RS. 1.10 CRORES TO SET OFF THE LOSSES. SINCE, THE ASSESSEE SOLD ITS ONLY INCOME GENERATING ASSET AS A WHOLE, THE ASSESSEE'S AR WAS ASKED TO EXPLAIN AS TO WHY THE ABOVE TRANSACTION SHOULD NOT BE TREATED AS SLUMP SALE WITH R EFERENCE TO SECTION 2 (42C) READ WITH SECTION 50B OF INCOME TAX ACT, 1961. SECTION 2(42C) WHICH SAYS THAT UNLESS THE CONTEXT OTHERWISE REQUIRES, THE TERM, 'SLUMP SALE' MEANS THE TRANSFER OF ONE OR MORE UNDERTAKINGS AS A RESULT O F THE SALE FOR A LUMP SUM CONSIDERATION WITHOUT VALUES BEING ASSIGNED TO THE INDIVIDUAL ASSETS AND LIABILITIES IN SUCH SALES. IN REPLY, THE AR. STATED THAT NO LIABILITIES HAVE TAKEN OVER BY THE BUYERS AND NO LIABILITY WAS IN EXISTENCE AT THE TIME OF SALE O F THE HOTEL AND HENCE THE FORMULA PRESCRIBED UNDER 50B IS NOT APPLICABLE IN THIS CASE. 2.3. THE ASSESSEE'S A R'S EXPLANATION IS NOT ACCEPTABLE. IT IS FACT THAT THE ASSESSEE'S ONLY INCOME GENERATING ASSET HAS BEEN SOLD IN ITS ENTIRETY, IT AMOUNTS TO SLUMP SALE ONLY. IT MAY BE NOTED HERE THAT 'SLUMP' MEANS DROPPING OR FALLING HEAVILY OF SOMETHING. IT CAN BE RELATED TO AN UNDERTAKING THAT HAS SUDDENLY DECLINED OR DETERIORATED OR SINKED HEAVILY BEING OPERATIONAL OR FINANCIAL LOSS . T HE INTENTION OF THE LAW MAK ER WAS TO INTRODUCE THE CONCEPT OF SLUMP SALE FOR THOSE UNDERTAKINGS WHOSE ASSETS & LIABILITIES HAS LOST ITS VALUE IN THE MARKET. IN THESE CASES, ASSIGNMENT IS NOT DONE FOR EACH ASSET OR LIABILITY BUT AS A WHOLE. IN THE ASSESSEE'S CASE THE ENTIRE BUSINESS WAS SOLD AT A CONSIDERATION OF RS. 20 . 00 CRORES FOR LAND, BUILDING WHICH INCLUDES FURNITURE (S), EQUIPMENT(S),KITCHEN EQUIPMENT(S), TELEPHONE - INSTRUMENTS, TELEVISION, LIFT, PRINTER, SOFTWARE AND COMPUTERS. THOUGH THE LAND WAS VALUED ITA NO. 384 / COCH /201 7. M/S. OOTY GATE HOTEL . 6 FOR STAMP DUTY PURPOSES , THE BUILDING AND OTHER AMENITIES ARE VALUED AS A WHOLE AND WITHOUT ASSESSING VALUE TO EACH ONE OF THE ITEMS. AS A RESULT OF SALE OF THE HOTEL PREMISES OF THE ASSESSEE, THE BUSINESS OF THE ASSESSEE HAS FALLEN APART AND ENTIRE BUSINESS VIRTUALLY ATTAINED I TS NATURAL DEATH. BESIDES, ON PERUSAL OF BALANCE SHEET OF THE ASSESSEE, THERE WAS SOME LIABILITY SHOWN UNDER THE CURRENT LIABILITIES. THEREFORE THE ASSESSEES ARGUMENT THAT THERE WAS NO LIABILITY IN EXISTENCE AT THE TIME OF SALE IS NOT ACCEPTABLE. 2.4 KEEPING THE FACTS IN VIEW, IT IS EXPOSED THAT THE ASSESSEE DELIBERATELY REPORTED THE SALE PROCEEDS UNDER THE HEAD BUSINESS AND CAP ITAL G AIN IN ORDER TO AVAIL ADJUSTMENT OF CARRY FORWARD LOSS OF RS.2,66,23,869/ - ONLY TO AVOID CAPITAL GAIN ON SLUMP SALE. THE REFORE, THE ASSESSEE'S COMPUTATION IS NOT ACCEPTABLE AND THE SAME IS REJECTED. ACCORDINGLY, THE CAPITAL GAIN ON SLUMP SALE I . E. CAPITAL GAIN = (NET CONSIDERATION) - (NET WORTH) AS PER SECTION 2( 42C) READ WITH SECTION 50B IS COMPUTED IN THE FOLLOWING MANNER : - COMPUTATION OF NET WORTH NO COST OF ACQUISITION OR COST OF IMPROVEMENT NO ACTUAL COST OF ACQUISITION OR COST OF IMPROVEMENT SHALL BE TAKEN FOR THE COMPUTATION OF NET WORTH. NET WORTH SHALL BE TAKEN ON THE BASIS OF: - BOOK VALUES OF ASSETS & LIAB ILITIES - AS ON THE DATE OF TRANSFER NO INDEXATION : NO INDEXATION IS REQUIRED SINCE EVEN COST OF ACQUISITION OR IMPROVEMENT SHALL NOT BEEN CONSIDERED FOR THE COMPUTATION OF NET WORTH. UNABSORBED LOSSES AND DEPRECIATION : THE UNABSORBED LOSSES AND DEPRECIATION WITH RESPECT TO TRANSFERRED UNDERTAKING SHALL BE ALLOWED TO CARRY FORWARD IN FUTURE YEARS TO THE TRANSFEROR. ITA NO. 384 / COCH /201 7. M/S. OOTY GATE HOTEL . 7 TAXABILITY : THE NET AMOUNT OF PROFIT OUT OF TRANSFER WITH RESPECT TO SLUMP SALE SHALL BE TAXABLE UNDER THE HEAD 'CAPITAL GAINS'. NO INCOME SHALL BE TAXABLE UNDER INCOME FROM BUSINESS IF THE TRANSFER HAS DULY COMPLIED WITH THE CONDITIONS BEING A SLUMP SALE. EVEN `STOCK IN TRADE OF SUCH UNDERTAKING SHALL NOT BE TAXABLE UNDER INCOME FROM BUSINESS. TAXABLE YEAR : THE TAXABLE YEAR SHALL BE THE `EFFECTIVE YEAR, WHERE EFFECTIVE YEAR IS THE YEAR IN WHICH TRANSFER OF UNDERTAKING HAS BEEN LEGALLY MADE EFFECTIVE. THE TAXABILITY SHALL NOT BE DEPENDENT UPON THE DATE OF ACTUAL POSSESSION OF ASSETS OR ACTUAL TRANSFER. EFFECTIVE DATE SHALL BE TAKEN AS THE DATE OF AGREEMENT OR EFFECTIVE DATE, IF ANY SPECIFIED THEREIN. COMPUTATION OF CAPITAL GAINS: NET PROFIT SHALL BE, SLUM P SALE CONSIDERATION LESS `NET WORTH OF THE UNDERTAKING OR DIVISION. 2.5 ACCORDINGLY, THE CAPITAL GAIN ON SLUMP SALE AS PER SECTION 50B OF THE I.T.ACT IN THE ASSESSEES CASE IS COMPUTED AS UNDER FOR THE ASST. YEAR 2013 - 14 AND THE SAME IS BROUGHT TO TAX I N THE HANDS OF THE ASSESSEE. 3 . 2 AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. AS REGARDS THE ISSUE WHETHER THE SALE OF LAND AND BUILDING OF HOTEL IS TO BE TREATED AS ` SLUMP SALE OR NOT? T HE CIT(A) DECIDED THE MATTER IN FAVOUR OF THE ASSESSEE. THE RELEVANT FINDING OF THE CIT(A) IN THIS REGARDS, READS AS FOLLOWS: - 4.4. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND SUBMISSION OF THE APPELLANT. I HAVE ALSO PERUSED THE JUDICIAL PRONOUNCEMENTS REL IED UPON BY THE ASSESSEE. IN THIS CASE, THE APPELLANT FIRM WAS RUNNING A HOTEL ITA NO. 384 / COCH /201 7. M/S. OOTY GATE HOTEL . 8 AT OOTY, TAMIL NADU BY THE NAME OF OOTY GATE HOTEL. DURING THE YEAR UNDER CONSIDERATION, THE FIRM SOLD THE LAND AND BUILDING OF THE HOTEL ALONG WITH ITS BUSINESS OF HOTEL FOR A TOTAL CONSIDERATION OF RS. 20,00,00,000/ - . OUT OF THE ABOVE, RS. 13,86,52,000/ - PERTAINS TO LAND, RS. 5,03,48,000/ - TO BUILDING AND BALANCE RS.1,10,00,000/ - TO THE BUSINESS. THE ASSESSEE DISCLOSED LONG TERM CAPITAL GAIN ON LAND AND SHORT TERM CAPITAL GAIN ON BUILDING WHILE THE ASSESSEE FIRM THESE INCOMES FOR TAXATION, IT ALSO SET - OFF BROUGHT FORWARD LOSES OF RS. 2.66 CRORES. TOTAL INCOME WAS DECLARED AT RS. 11,49,71,882/ - . THE ASSESSING OFFICER HELD THAT SELLING LAND AND BUILDING SEPARATELY WAS AN THE ASSESSING OFFICER HELD THAT SELLING LAND AND BUILDING SEPARATELY WAS AN INSTRUMENT OR A COLOURABLE DEVICE TO SET - OFF CARRY FORWARD LOSSES. THE ASSESSING OFFICER HELD IT TO BE A SLUMP SALE AND RE - COMPUTED THE CAPITAL GAINS AND AS A RESULT TOTAL INCOME WAS ASSESSED AT RS.15, 14,82,700 / - AND SET OFF OF BROUGHT FORWARD LOSSES WERE DENIED. THE APPELLANT CONTENDS THAT THE FACTS OF ITS CASE DOES NOT QUALITY IT AS A SLUMP SALE, AS 'SLUMP SALE' IS AN EXCLUSIVE DEFINITION ( USING THE WORD 'MEANS' INSTEAD OF 'INCLUDES'), IT CAN BE CONSIDERED AS A SLUMP SALE ONLY WHEN BOTH ASSETS AND LIABILITIES OF UNDERTAKING ARE TRANSFERRED FOR A LUMP SUM CONSIDERATION. IN THIS CASE, ONLY THE LAND AND BUILDING HAVE BEEN SOLD FOR SEPARATE AMOUNTS OF SALE CONSIDERATION AND THE ASSETS AND LIABILITIES, AVAILABLE IN THE BALANCE - SHEET, HAVE NOT BEEN SOLD AT ALL. AND TH EREFORE THIS TRANSACTION C AN NOT BE HELD TO BE A SLUMP SALE. TO SUPPORT ITS CONTENTION, THE APPELLANT PLACED RELIANCE ON THE DECISION OF HON'BLE ITAT, KOLKATA, 'B' BENCH IN ITA NO. 1233/KO1/2008 IN DCIT VS. TONGANI TEA COMPANY LTD, WHEREIN HON'BLE ITAT DE CIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE AND REFERRED TO THE DECISION OF HON'BLE JURISDICTIONAL IT ITA NO. 384 / COCH /201 7. M/S. OOTY GATE HOTEL . 9 AT, COCHIN BENCH IN THE CASE OF ACCELERATED FREEZE DRYING CO. LTD. VS DCIT IN ITA NO. 611/COCH/08 ORDER DATED 15.12.2008. APART FROM THE ABOVE HON'BLE KOL KATA ITAT CONSIDERED MANY OTHER DECISIONS AND FINALLY CONCLUDED AS UNDER: 'IN THE INSTANT CASE, THE ITEMS SOLD DID NOT INCLUDE LIABILITIES. THE SALE AGREEMENT DID NOT INCLUDE INVESTMENTS AND DEPOSITS. ACCORDINGLY, ALL THE INVESTMENTS, DEPOSITS, RECEIVABLES, STOCK AND SUCH OTHER CURRENT ASSETS IN THE FORM OF FINANCIAL AND OTHER ASSETS REMAINED WITH THE ASSESSEE - COMPANY ALONG WITH THE LIABILITIES. ONLY THOSE ASSETS WHICH WERE ENUMERATED IN THE SCHEDULES AND ANNEXURES WERE SO LD TO THE VENDEE. THEREFORE, THE INSTANT CASE WAS ONE OF THE SPLIT SALE AND NOT A CASE OF SLUMP SALE. ACCORDINGLY, WE ARE OF THE VIEW THAT IN THE INSTANT CASE, THE ASSESSEE HAD SOLD TEA ESTATE, EXCLUDING CASH IN HAND, STOCK IN HAND, RECEIVABLES, FINANCE AS SETS AND LIABILITIES. IT WAS NOT A CASE OF SALE BY LOCK, STOCK AND BARREL. THE ASSESSEE HAD MADE CONSCIOUS EXCLUSIONS. THE ASSETS SOLD BY THE ASSESSEE HAD BEEN LISTED OUT IN DIFFERENT SCHEDULES AND ANNEXURES. THE CONSIDERATION HAD BEEN SPECIFICALLY ASSIGNE D TO THE SALE OF IMMOVABLE PROPERTY BY WAY OF TEA ESTATE. SEPARATE CONSIDERATION HAD BEEN ASSIGNED TO THE SALE OF MOVABLE PROPERTIES INCLUDING VEHICLES AND PROPERTIES. THEREFORE IT WAS NOT A CASE OF SLUMP SALE FOR A LUMP SUM AMOUNT OF CONSIDERATION. FURTHE R, AS ALL THE ASSETS AND LIABILITIES HAD NOT BEEN SOLD AS PER THE AGREEMENT, THIS WAS NOT A SLUMP SALE AS CONSTRUED IN SECTION 50B OF THE ACT. ACCORDINGLY, IN VIEW OF THE ABOVE FACTS OF THIS CASE AND POSITION OF LAW DISCUSSED IN VARIOUS CASE LAWS OF DIFFE RENT HON'BLE COURTS, WE ARE OF THE VIEW THAT THE SALE OR NAGRIJULI TEA ESTATE WAS NOT A SLUMP SALE WITHIN THE MEANING OF SECTION 2(42C) OF THE ACT READ WITH SECTION 50B OF THE ACT, AND THEREFORE, NOT EVEN ASSESSABLE TO CAPITAL GAINS. ACCORDINGLY, WE UPHOL D THE ORDER OF CIT(A) AND THE ISSUE OF REVENUES' APPEAL ITA NO. 384 / COCH /201 7. M/S. OOTY GATE HOTEL . 10 IS DISMISSED. I FIND THE FACTS OF THE INSTANT CASE, QUITE SIMILAR TO THE CASE DISCUSSED ABOVE. ONLY THE LAND AND BUILDING OF THE HOTEL WAS SOLD. SEPARATE CONSIDERATIONS WERE ASSIGNED AND RECEIVED F OR THE SAME. OTHER ASSETS AND LIABILITIES WERE NOT SOLD AT ALL. THEREFORE, THIS SALE CAN NOT BE TERMED AS A SLUMP SALE IN TERMS OF PROVISIONS OF SECTION 50B OF THE ACT. CONCLUSIONS DRAWN BY THE ASSESSING OFFICER CANNOT BE SUSTAINED. THIS GROUND OF APPEAL OF THE APPELLANT IS ALLOWED, AND ADDITION MADE NO THIS ACCOUNT IS DELETED. 5. GROUND OF APPEAL N O .2 AND 3 ARE CONSEQUENTIAL IN NATURE AS THEY RELATE TO DENIAL OF SE T - OFF OF BROUGHT FORWARD LOSSES AS WELL AS CURRENT YEARS BUSINESS LOSS. THIS HAPPENED BE CAUSE THE ASSESSING OFFICER TREATED THE TRANSACTION AS SLUMP SALE. SINCE, I HAVE ALLOWED T HE 1 ST GROUND OF APPEAL, THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE BROUGHT FORWARD LOSSES AND CURRENT YEARS BUSINESS LOSS, AS PER THE PROVISIONS OF THE ACT. FOR STATISTICAL PURPOSES, THESE GROUNDS OF APPEAL OF THE APPELLANT ARE TREATED AS ALLOWED. 3.3 AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. THE LEARNED DEPARTMENTAL REPRESENTATIVE, APART FROM RELYING ON THE GROUND S RAISED, STRONGLY SUPPORTED THE ASSESSMENT ORDER. THE LEARNED AR, ON THE OTHER HAND, REITERATED THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER AND HAS ALSO FILED A PAPER BOOK COMPRISING OF 88 PAGES, INTER ALIA, ENCLOSING THE CASE LAWS RELIED ON, COPY OF THE LEDGER ACCOUNT OF THE TERM LOAN THE ASSESSEE HAD TAKEN FROM SOUTH INDIAN BANK, BANK STATEMENT, COPY OF SALE DEED EXECUTED ON 18.01.2013, ETC. THE LEARNED AR HAS ALSO ITA NO. 384 / COCH /201 7. M/S. OOTY GATE HOTEL . 11 SUBMITTED A BRIEF WRITTEN SUBMISSION AND THE SAME READS AS FOLLOWS: - THE LEARNED CIT (A) IS RIGHT IN HOLDING IN ASSESSEE'S FAVOR, THAT THE LEARNED AO ERRED IN LAW AND FACTS, IN CONSIDERING THE SALE OF LAND AND BUILDING OF A HOTEL AS A 'SLUMP SALE' AND IN INVOKING THE SPECIAL PROVISION OF SECTION.50B FOR COMPUTATION OF ITS' CAPITAL GAIN, INSTEAD OF THE REGULAR PROVISIONS OF SECTION 48 AND SECTION 50 ON THE FOLLOWING REASONS: - A. THE SALE OF LAND AND HOTEL BUILDING OF THE APPELLANT WILL NOT COME WITHIN THE MEANING OF 'SLUMP SALE' DEFINED U/S.2 ( 42C ) SINCE 'ASSETS AND LIABILITIES' ARE NOT TRANSFERRED, BUT ONLY 'ASSETS' ARE TRANSFERRED. IN O THER WORDS, WHAT IS TRANSFERRED IS 'ASSETS' ONLY AND' NOT 'ASSETS AND LIABILITIES' AS CONTEMPLATED IN THE DEFINITION OF 'SLUMP SALES'. VIDE PAGE 9 PARA 3 AND PAGE 15 OF THE COPY OF THE SALE DEED EXECUTED ON 18.01.2013 ENCLOSED. ( PAGE 30 TO 46 ) A) AS PER SECTION 2(42C), 'SLUMP SALE MEANS THE TRANSFER OF ONE OR MORE UNDERTAKINGS AS A RESULT OF THE SALE FOR A LUMP SUM CONSIDERATION WITHOUT VALUES BEING ASSIGNED TO THE INDIVIDUAL ASSETS AND LIABILITIES IN SUCH SALES'.(EMPHASIS SUPPLIED) B) AS THE DEFI NITION OF 'SLUMP SALE' IS AN EXCLUSIVE DEFINITION (USING THE WORD 'MEANS' INSTEAD OF 'INCLUDES'), IT WILL BE CONSIDERED AS A 'SLUMP SALE' ONLY WHEN BOTH ASSETS AND LIABILITIES OF UNDERTAKING ARE TRANSFERRED FOR A LUMP SUM CONSIDERATION. C) IN CASE OF THE ASSESSEE, HUGE LIABILITIES EXISTED AT THE TIME OF SALE. THESE LIABILITIES WERE NOT TAKEN OVER BY THE PURCHASER AND WE HAVE SETTLED ALL THESE LIABILITIES OUT OF THE SALE PROCEEDS OF LAND AND BUILDING. SO, OUR SALE TRANSACTION OF LAND AND BUILDING IS NOT A SLUMP SALE WITHIN THE INCLUSIVE DEFINITION OF SECTION 2(42C) READ WITH SECTION 50B. ITA NO. 384 / COCH /201 7. M/S. OOTY GATE HOTEL . 12 D) AS PER THE ASSESSMENT ORDER, LAND AND BUILDING SOLD FOR RS.20,00,00,000/ - (LAND 13,86,52,000 AND BUILDING 6,13,48,000) IS TREATED AS SLUMP SALE ON THE WRONG PRESUMPTIO N THAT NO LIABILITIES HAVE BEEN TAKEN OVER BY THE BUYERS AS NO LIABILITY WAS IN EXISTENCE AT THE TIME OF SALE OF LAND AND BUILDING. KINDLY REFER TO PAGE 4, FIRST PARA OF THE ASSESSMENT ORDER WHERE THE WRONG PRESUMPTION IS MADE, WHICH READS ' IN REPLY, THE A.R. STATED THAT NO LIABILITIES HAVE BEEN TAKEN OVER BY THE BUYERS AND NO LIABILITY WAS IN EXISTENCE AT THE TIME OF SALE OF HOTEL . IN THIS PART, AN OBVIOUS MISTAKE IN THE ASSESSMENT ORDER IS THAT THE ASSERTION THAT 'AS THE AR STATED THAT NO LIABILI TY WAS IN EXISTENCE AT THE TIME OF SALE' IS WRONG IN AS MUCH AS AR HAS NOT STATED DURING THE COURSE OF HEARING THAT 'NO LIABILITY WAS IN EXISTENCE AT THE TIME OF SALE'. HOWEVER, THE ASSESSING OFFICER HAS CORRECTED THIS WRONG PRESUMPTION BY RECORDING HIS FINDING THAT THERE WAS SOME LIABILITY SHOWN UNDER THE CURRENT LIABILITIES IN THE BALANCE SHEET OF THE ASSESSEE VIDE PAGE 4 PARA 2.3 LAST LINES WHICH READS AS UNDER ' BESIDES, ON PERUSAL OF BALANCE SHEET OF THE ASSESSEE, THERE WAS SOME LIABILITY SHOWN U NDER THE CURRENT LIABILITIES, THEREFORE, THE ASSESSEE'S ARGUMENT THAT THERE WAS NO LIABILITY IN EXISTENCE AT THE TIME OF SALE IS NOT ACCEPTABLE . ' IN FACT, SO MANY LIABILITIES SUCH AS SOUTH INDIAN BANK TERM LOAN LIABILITY FOR RS. 4,77,63, 766/ - AND OVERD RAFT FACILITY FOR RS.51 ,01 ,347/ - AND OTHER STATUTORY LIABILITIES WERE IN EXISTENCE AS ON THE DATE OF SALE AND THAT LIABILITIES WERE CLOSED BY THE ASSESSEE HIMSELF OUT OF THE SALE PROCEEDS. COPIES OF THE RELEVANT PAGES OF GENERAL LEDGER, SHOWING SIB TERM LOAN ACCOUNT AND SIB OD ACCOUNT (COPY ENCLOSED PAGE 47 TO 49) AND COPIES OF BANK STATEMENT SHOWING SIB TERM LOAN ACCOUNT AND SIB ITA NO. 384 / COCH /201 7. M/S. OOTY GATE HOTEL . 13 0 D ACCOUNT (COPY ENCLOSED PAGE 50 TO 62 ) ARE AVAILABLE TO PROVE THE CONTENTIONS OF THE ASSESSEE. DETAILS OF THE SAID SECURED BANK LOAN LIABILITIES WERE SUBMITTED IN THE COURSE OF ASSESSMENT AS ANNEXURE TO THE REPLY LETTER TO NOTICE OF THE ASSESSING OFFICER DATED 05.01.2016, AS PER PARA 4, WHICH READS AS FOLLOWS: .. 4. DETAILS OF SECURED AND UNSECURED LOAN : LOAN BALANCE AS ON 31.03.2012 BALANCE AS ON 31.03.2013 NET INCREASE / DECREASE REMARKS A.SECURED LOANS A) SIB TERM LOAN B) SIB OD A/C B. UNSECURED LOANS 4,45,25,704.00 50,71,943.00 NIL NIL NIL NIL LOAN CLOSED OUT OF SALE PROCEEDS .. E) AS PER THE SALE DEED, THE ABOVE LIABILITIES ARE NEITHER SOLD BY THE ASSESSEE NOR PURCHASED BY THE BUYERS. THE ASSESSEE BEING A PARTNERSHIP FIRM (WITH UNLIMITED LIABILITY FOR PARTNERS) THE LIABILITY REMAIN WITH THE PARTNERS. HENCE IN THE ABSENCE OF ANY EVI DENCE, IN THE SALE DEED, THE CONTENTION OF THE AO THAT WHAT IS SOLD IN ASSETS AND LIABILITIES TOGETHER, CONSTITUTING A 'SLUMP SALE' IS AGAINST THE FACTS. B. FURTHER, SALE OF LAND AND BUILDING OF THE ASSESSEE WILL NOT COME WITHIN THE MEANING OF 'SLUMP SAL E' DEFINED U/S.2 ( 42C ) SINCE WHAT IS TRANSFERRED IS NOT AN 'UNDERTAKING' AS CONTEMPLATED IN THE DEFINITION OF 'SLUMP SALE' BUT ONLY A COMBINATION OF ASSETS BEING LAND AND THE BUILDING THEREIN. ITA NO. 384 / COCH /201 7. M/S. OOTY GATE HOTEL . 14 A) AS PER SECTION 2(42C), 'SLUMP SALE MEANS THE TRANSFER OF O NE OR MORE UNDERTAKINGS AS A RESULT OF THE SALE FOR A LUMP SUM CONSIDERATION WITHOUT VALUES BEING ASSIGNED TO THE INDIVIDUAL ASSETS AND LIABILITIES IN SUCH SALES'(EMPHASIS SUPPLIED). B) AS PER THE EXCLUSIVE DEFINITION OF 'SLUMP SALE' REFERRED ABOVE, IT WI LL BE CONSIDERED AS A 'SLUMP SALE' ONLY WHEN ONE OR MORE 'UNDERTAKINGS' ARE TRANSFERRED; AND AS PER EXPLANATION 1 TO SEC.2(42C) 'UNDERTAKING' SHALL HAVE THE MEANING ASSIGNED TO IT IN' EXPLANATION 1 TO CLAUSE (19AA) OF SEC.2. EXPLANATION 1 TO CLAUSE (19A A) OF SEC.2 READS AS FOLLOWS: ' FOR THE PURPOSE OF THIS CLAUSE, U NDERTAKING' SHALL INCLUDE ANY PART OF AN UNDERTAKING, OR A UNIT OR DIVISION OF AN UNDERTAKING OR A BUSINESS ACTIVITY TAKEN AS A WHOLE, BUT DOES NOT INCLUDE INDIVIDUAL ASSETS OR LIABILITIES O R ANY COMBINATION THEREOF NOT CONSTITUTING A BUSINESS ACTIVITY '(EMPHASIS SUPPLIED). HENCE THE WORD 'UNDERTAKING' DOES NOT INCLUDE COMBINATION OF ASSETS (LAND AND BUILDING IN THIS CASE), NOT CONSTITUTING A BUSINESS ACTIVITY. WHAT WE HAVE SOLD IS LAND AND BUILDING OF A HOTEL, AND AS IT DOES NOT CONSTITUTE A BUSINESS ACTIVITY, IT IS NOT AN UNDE RTAKING AS DEFINED IN SECTION 2 (19AA) EXPLANATION 1. AS LAND AND BUILDING IS NOT AN 'UNDERTAKING', TRANSFER THEREOF WILL NOT CONSTITUTE 'A SLUMP SALE' WITHIN THE MEANING OF SECTION 2(42C). HENCE SALE OF THE LAND AND BUILDING WILL NOT ATTRACT SECTION 5 0B, THE SPECIAL PROVISION FOR COMPUTATION OF CAPITAL' GAIN IN THE CASE OF 'SLUMP SALE'. C. FURTHER, EXPLANATION 1 TO SECTION 50B, THE SPECIAL PROVISION FOR COMPUTATION OF CAPITAL GAIN IN THE CASE OF 'SLUMP SALE' READS AS FOLLOWS: ITA NO. 384 / COCH /201 7. M/S. OOTY GATE HOTEL . 15 EXPLANATION 1 - FOR THE PURPOSES OF THIS SECTION, 'NET WORTH' SHALL BE THE AGGREGATE VALUE OF TOTAL ASSETS OF THE UNDERTAKING OR DIVISION AS REDUCED BY, THE VALUE OF LIABILITIES OF SUCH UNDERTAKING OR DIVISION AS APPEARING IN ITS BOOKS OF ACCOUNT (EMPHASIS SUPPLIED) .. A) WHAT IS CLEAR FROM THE ABOVE IS THAT SECTION 50B, THE PROVISION THAT PROVIDES FOR COMPUTATION OF CAPITAL GAIN IN THE CASE OF SLUMP SALE, IS APPLICABLE ONLY WHEN THE NET WORTH (TOTAL ASSETS MINUS TOTAL LIABILITIES) OF THE BUSINESS UNDERTAKING IS TRANSFERRE D AS A GOING CONCERN FOR A LUMP SUM CONSIDERATION. B) IN OTHER WORDS, 50B DEALS WITH THE TRANSFER OF AN UNDERTAKING HAVING 'NET WORTH' (ASSETS MINUS LIABILITIES) AND IT DOES NOT DEAL WITH THE TRANSFER OF INDIVIDUAL ASSETS OR GROUP OF AS SETS HAVING ONLY V ALUE (AS AGAI NST 'NET WORTH') AS THERE ARE NO LIABILITIES. AS THE TRANSFER OF LAND AND BUILDING OF THE ASSESSEE DOES NOT INVOLVE THE ELEMENT OF 'NET WORTH', SECTION 50B IS NOT APPLICABLE THE CASE OF THE ASSESSEE. D. FOR ERRONEOUSLY CONCLUDING THAT THE T RANSACTION IS A 'SLUMP SALE', THE LD. AO OUGHT NOT HAVE BEEN CARRIED AWAY BY THE MISTAKE COMMITTED BY THE ASSESSEE IN TREATING A PART OF THE CONSIDERATION OF SALE OF BUILDING AS BUSINESS PROFIT, SINCE IT IS AN ERROR 'IPSO FACTO', AN ERROR REVEALED BY VERI FIABLE FACTS ITSELF. THE LD. AO ERRED IN VIOLATING THE DIRECTIONS OF CBDT AS PER CIRCULAR NO.14 XL - 35/1955' DATED 11.04.1955 (COPY ENCLOSED. PAGE 63 TO 64) ITA NO. 384 / COCH /201 7. M/S. OOTY GATE HOTEL . 16 RELIANCE IS PLACED ON SAN CHIT SOFTWARE AND SOLUTIONS (P) LTD. VS. CIT - 8 WRIT PETITION NO.7833 OF 2012 ORDER DATED 7TH SEPTEMBER, 2012, OF THE HON'BLE HIGH COURT OF BOMBAY. COPY ENCLOSED (PAGE 65 TO 73). E. RELIANCE IS PLACED ON DEPUTY COMMISSIONER OF INCOME TAX VS. TONGANI TEA CO. LTD. (2016) 177 TT J 0334(KOL): (2016) 156 ITD 0188 (KOLKATA ) (COPY ENCLOSED. PAGE 74 TO 88 ), WHERE THE DECISION OF THE HON'BLE TRIBUNAL OF COCHIN IN THE CASE OF HARRISON MALAYALAM LTD. V, ASSTT.CIT[2009] 32 SOT 497 (COCHIN) IS RELIED. VIDE PAGE 11 PARA 16 OF DEPUTY COMMISSIONER OF INCOME TAX VS. TONGANI TEA CO. LTD.(SUPRA) . PRAYER F OR THE ABOVE GROUNDS AND SUCH OTHER GROUNDS THAT MAY BE URGED AT TH E TIME OF HEARING, IT IS PRAYED THAT THE APPEAL OF THE DEPARTMENT MAY KINDLY BE DISMISSED. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECOR D. THE SOLITARY ISSUE FOR OUR CONSIDERATION IS WHETHER THE SALE DEED EXECUTED ON 1 8.01.2013 AS REGARDS THE LAND AND BUILDING OF HOTEL WAS A ` SLUMP SALE GOVERNED BY THE PROVISIONS OF SECTION 50B OF THE I.T.ACT OR NOT? `SLUMP SALE IS A SALE OF AN UNDERTAKING AS A GOING CONCERN. THE CONCEPT OF SLUMP SALE IS NOT NEW FOR PURPOSES OF INCOME - TAX LAW, THOUGH A SPECIAL PROCEDURE HAS BEEN PRESCRIBED FOR COMPUTATION OF INCOME FROM SLUMP SALE UNDER SECTION 50B, WITH EFFECT FROM 1.4.2000 I.E. A.Y. 2000 - 2001. IN THE CASE OF DOUGHTY V. TAXES COMMISSIONER [(1927) AC 327 (PC)] , THE E NGLISH COURT HAD ITA NO. 384 / COCH /201 7. M/S. OOTY GATE HOTEL . 17 HELD THAT IN THE CASE OF A SLUMP SALE, TAX INCIDENCE CANNOT BE WITH REFERENCE TO ANY SPECIFIC ITEMS OF ASSET COVERED BY SUCH SALE AS FOR EXAMPLE, IN RESPECT OF STOCK C OMPRISED IN SUCH BUSINESS. THE ABOVE PRINCIPLE WAS APPROVED BY THE HONBLE SUPREME COURT IN CIT V. WEST COAST CHEMICALS AND INDUSTRIES LTD. [(1962) 46 ITR 135 (SC)]. THE TEST FOR DETERMINATION OF WHAT CONSTITUTES A SLUMP SALE ARE LAID DOWN IN ARTEX MANUFACT URING CO. [(1997) 227 ITR 260 (SC)] IN A CASE WHERE SEVARALITY IN SALE WAS INFERRED AND IN CIT V. ELECTRIC CONTROL GEAR MANUFACTURING CO. [(1997) 227 ITR 278 (SC)] , WHERE THE INFERENCE WAS THAT IT WAS A SLUMP SALE. THE ADVANTAGE OF SLUMP SALE IS NOT ONLY T HAT BUSINESS PROFIT ATTRIBUTABLE TO STOCKS CANNOT BE TREATED AS BUSINESS PROFITS TAXABLE AT NORMAL RATE, BUT ALSO, THAT THE PROFIT ON SALE OF DEPRECIABLE ASSETS COVERED UNDER SECTION 41(2) LIABLE TO TAX AT NORMAL RATE TO THE EXTENT OF DEPRECIATION ALREADY ALLOWED WOULD AVOID TAX AT NORMAL RATE. AFTER SECTION 41(2) WAS SUBSTITUTED BY SECTION 50, INCIDENCE OF TAX AS SHORT TERM CAPITAL GAINS IS AVOIDED. ALL THAT IS NECESSARY IS THAT THE SURPLUS ON SALE OF BUSINESS HAS TO SUFFER TAX AS LONG TERM CAPITAL GAINS. BUT AFTER SECTION 50B, THE BENEFIT OF INDEXATION IS NOT AVAILABLE, SO THAT TAXPAYER MAY FIND SEVERABLE SALE MORE WELCOME IN CERTAIN CASES DEPENDING ON THE BUSINESS EXIGENCIES . 4.1 THE ASSESSEE HAD SOLD LAND AND BUILDING FOR A TOTAL CONSIDERATION OF RS.20 CRORE VIDE SALE DEED DATED 18.01.2013. COPY OF THE SALE DEED IS ENCLOSED AT PAGE 30 TO 42 OF THE PAPER BOOK FILED BY THE ASSESSEE. IN THE SCHEDULE TO THE SALE DEED , ITA NO. 384 / COCH /201 7. M/S. OOTY GATE HOTEL . 18 THE LAND AND BUI LDING VALUE WAS SHOWN AT RS. 13,86,52,000 AND RS.6,13,48,000, RESPECTIVELY . HOWEVER, IN THE STATEMENT OF INCOME FILED ALONG WITH RETURN OF INCOME THE SALE CONSIDERATION OF RS.20 CRORE WAS BIFURCATED IN THE FOLLOWING MANNER : - LAND RS.13,86,5 2 ,000 BUILD ING RS. 5,03,48,000 BUSINESS RS. 1,10,00,000 -------------------- TOTAL RS.20,00,00,000 ============== 4.2 IT WAS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE BUSINESS INCOME SHOWN AT RS.1.10 CRORE WAS A MISTAKE. WE ARE IN TOTAL AGREEMENT WITH THE LEARNED AR THAT THE MISTAKE COMMITTED IN THE RETURN OF INCOME CANNOT BE THE BASIS OF ASSESSMENT OF NO N - TAXABLE RECEIPT AS INCOME. WE ALSO AGREE WITH THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE ASSESSING OFFICER SHALL NOT TAKE ADVANTAGE OF THE MISTAKES / IGNORANCE OF THE ASSESSEE WHILE FRAMING THE ASSESSMENT. IN THIS CONTEXT, THE RELIANCE PLACED BY THE L EARNED AR ON THE BOARD CIRCULAR NO. 014(XL - 35) DATED 11 TH APRIL, 1955, IS CORRECT. 4.3 IN ORDER TO UNDER STAND WHETHER THE SALE WAS A SLUMP SALE OR SALE OF INDEPENDENT ITEMS OF ASSETS , NECESSARY WE HAVE TO EXAMINE THE INTENTION OF THE PARTIES TO THE SALE AGREEMENT. IF THE BUSINESS OF THE VENDOR IS SOLD AS SUCH AS A GOING CONCERN, IT WILL TANTAMOUNT TO A SLUMP SALE. IF THE SALE IS A ITA NO. 384 / COCH /201 7. M/S. OOTY GATE HOTEL . 19 SLUMP SALE, THEN PROVISIONS OF SECTION 50B OF THE I.T.A CT WILL HAVE APPLICATION. THE IMPUGNED SALE DEED EXECUTED ON 18.01.2013, MENTIONS ONLY THE SALE OF LAND AND BUILDING FOR A TOTAL CONSIDERATION OF RS.20 CRORE. HOWEVER, WE NOTICE FROM PAGE 9 OF THE SALE DEED, WHAT WAS SOLD BY VENDOR INCLUDES ALSO LICENSE F OR BOARDING, LODGING, BAR ETC. THE ASSESSEE WAS RUNNING A HOTEL BUSINESS IN OOTY . ON SALE OF THE PROPERTY, THE BUSINESS OF THE ASSESSEE WAS CLOSED DOWN AND THE ASSETS OF THE ASSESSEE AS WHOLE WAS TRANSFERRED TO THE PURCHASER, VIZ., M/S.BKR HOTELS AND RESOR TS PRIVATE LIMITED. IT IS AN ADMITTED FAC T THAT THE PURCHASER IS IN HOTEL BUSINESS. IT IS ALSO ADMITTED FACT THAT PURCHASER, AFTER SUBSTANTIAL INVESTMENT ON THE PROPERTY CARRIED ON THE HOTEL BUSINESS IN THE SAID PREMISES. IT IS CLEAR FROM READING OF THE ENTIRE CLAUSE OF THE SALE DEED THAT THE ASSE TS OF THE ASSESSEE, INCLUDING THE LICENSE FOR BOARDING, LODGING, BAR ETC. WERE ALSO TRANSFERRED TO THE PURCHASER ALONG WITH LAND AND BUILDING AS A GOING CONCERN. THE ENTIRE BUSINESS WAS SOLD FOR A TOTAL CONSIDERATION OF RS.20 CRORE CONSISTING OF LAND AND B UILDING WHICH INCLUDES FURNITURE , EQUIPMENTS, K ITCHEN EQUI PMENTS, TELEPHONE INSTRUMENTS, TELEVISION, COMPUTER, ETC. THE BUILDING AND OTHER AMENITIES ARE VALUED AS A WHOLE , WITHOUT ASSIGNING VALUE TO ANY ITEM OF THE ASSETS. AS MENTIONED EARLIER, CONSEQUENT TO THE SALE OF THE HOTEL PREMISES, THE BUSINESS OF ASSESSEE WAS CLOSED DOWN. THEREFORE, IT IS CLEAR FROM THE SALE DEED EXECUTED, THE INTENTION OF THE PARTIES WAS TO SELL THE HOTEL BUSINESS AS A GOING CONCERN AND THE SAME IS NOTHING BUT A SLUMP SALE. ITA NO. 384 / COCH /201 7. M/S. OOTY GATE HOTEL . 20 4.4 T HE LEARNED AR HAD CONTENDED THAT IT IS NOT A SLUMP SALE GOING BY THE DEFINITION OF SECTION 2(42C) OF THE I.T.ACT FOR THE REASON THAT THERE IS NO LIABILITY TRANSFERRED TO THE PURCHASER AS ON THE DATE OF SALE. ADMITTEDLY, THE ASSESSEE WAS HAVING HUGE LIABILITY PRIOR TO THE DATE OF SALE WITH M/S. SOUTH INDIAN BANK, BANERJI ROAD . T HE IMPUGNED PROPERTY WAS MORTGAGED TO SOUTH INDIAN BANK. THE LIABILITY INCURRED BY THE ASSESSEES FIRM IN NORMAL CIRCUMSTANCE HAD TO BE CLEARED BY THE ASSESSEE ITSELF PRIOR TO SALE AS BANKS ARE RELUCTANT TO TRANSFER THE MORTGAGE TO THE PURCHASER. THEREFORE, UTILIZING ADVANCE RECEIVED FROM THE PURCHASER, THE ASSESSEE CLOSED THE LOAN AND THEREAFTER THE PROPERTY WAS SOLD. AS ON THE DATE OF SALE OF PROPERTY, IT IS EVIDENT FROM THE B ALANCE SHEET THAT THERE WAS LIABILITY OF ONLY RS.25,000 . THE LIABILITY OF RS.25,000 WAS CURRENT ACCOUNT LIABILITY. IN THE INSTANT CASE, AS MENTIONED EARLIER, IT IS NOT MERELY THE LAND AND BUILDING ALONE THAT WA S SOLD, BUT ALSO THE LICENSE FOR LODGING , BOAR DING, BAR ETC. AND THE ENTIRE PRICE OF RS.20 CRORE WA S SUBSUMED BY MENTIONING ONLY LAND AND BUILDING. ON THE FACTS OF THE GIVEN CASE, IT IS CLEAR THE BUSINESS OF THE ASSESSEE OF RUNNING OF THE HOTEL HAS BEEN SOLD AS SUCH BY SELLING THE HOTEL PREMISES TO A PRIVATE LIMITED COMPANY, WHO IS ALSO IN THE BUSINESS OF RUNNING OF HOTEL. THEREFORE, WE HAVE NO HESITATION TO HOLD THAT THE PROVISIONS OF SECTION 50B OF THE I.T.ACT HAS APPLICATION TO THE FACTS OF THE CASE. ITA NO. 384 / COCH /201 7. M/S. OOTY GATE HOTEL . 21 4.5 T HE KOLKATA BENCH OF THE TRIBUNAL IN THE CASE OF DCIT V. TONGANI TEA CO. LTD. [(2016) 156 ITD 0188 (KOL.)] RELIED ON BY THE LEARNED AR IS DISTINGUISHABLE ON FACTS. IN THAT CASE, IT IS CLEAR FROM THE FACTS ENUMERATED THAT THERE WA S NO INTANGIBLE ASSETS LIKE LICENSES, QUOTAS, BRAND NAME ETC. ASSOCIATED WITH THE BUSINESS THAT WAS TRANSFERRED. IT IS ALSO CLEAR IN THAT CASE THAT THERE WAS A VALUATION REPORT , WHEREIN THE VALUE FOR FIXED ASSETS OF THE TEA ESTATE WAS APPORTIONED BY ASSIGNING THE VALUE OF EACH OF THE ASSETS SUCH AS FURNITURE AND FIX TURE, VEHICLES, PLANT AND MACHINERY ETC. MOREOVER, THE ORDER OF THE COCHIN BENCH OF THE TRIBUNAL RELIED ON BY THE KOLKATA BENCH OF THE TRIBUNAL ( ACCELERATED FREEZE DRYING CO. LTD. DCIT [ITA NO.611/COCH/2008 ORDER DATED 15 TH DECEMBER, 2008 ) WAS REVERSED BY THE HONBLE HIGH COURT IN ITS JUDGMENT REPORTED IN 337 ITR 440. 4.6 FOR THE AFORESAID REASONS, WE ARE OF THE VIEW THAT THE SALE OF HOTEL PREMISES BY THE ASSESSEE WA S A SLUMP SALE, LIABLE TO THE TAXED U/S 50B OF THE I.T.ACT. IT IS ORDERED ACCORDINGLY. 5 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED . ORDER PRONOUNCED ON THIS 14 TH DAY OF AUGUST, 2018 . SD/ - SD/ - ( GEORGE GEORGE K ) ( CHANDRA POOJARI ) JUDICIAL MEMBER ACCOUNTANT MEMBER COCHIN ; DATED : 14 TH AUGUST, 2018 . DEVDAS* ITA NO. 384 / COCH /201 7. M/S. OOTY GATE HOTEL . 22 COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, COCHIN 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT (APPEALS) - II , KOCHI . 4. THE CIT , KOCHI . 5. DR, ITAT, COCHIN 6 . GUARD FILE.