Whether On The Facts And In The Circumstances Of The Case, The Learnedtribunal Erred In Treating The Sale Of The Chemical Unit Of The Assesseecompany As Itemise v. Whether The Impugned Order Is Perverse, Bad In Law And A Product Ofnon Application Of Judicial Mind ?Non Application Of Judicial Mind ?

OD-39 IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE ITAT/70/2017 IA NO: GA/2/2017(Old No.GA/677/2017)PRINCIPAL COMMISSIONER OF INCOME TAX, CENTRAL -1, KOLKATAVERSUS HINDUSTAN ENGINEERING AND INDUSTRIES LIMITED BEFORE : THE HON’BLE JUSTICE T.S. SIVAGNANAMAnd THE HON’BLE JUSTICE HIRANMAY BHATTACHARYYA Date : 22[nd] November, 2021 Appearance:- Ms. Sucharita Biswas, Adv. … For Appellant Mr. J.P. Khaitan, Sr. Adv. Mr. Saurabh Bagaria, Adv. Mr. Indranil Basu, Adv. … For Respondent The Court : This appeal by the revenue filed under Section 260A ofthe Income Tax Act, 1961 (the `Act’ for brevity) is directed against the orderdated 16[th] March, 2016 passed by the Income Tax Appellate Tribunal, “C”Bench, Kolkata (the `Tribunal’) in ITA No. 330/Kol/2013 for the assessmentyear 2009-10. The revenue has raised the following substantial questions of law forconsideration:- 1.Whether on the facts and in the circumstances of the case the LearnedTribunal erred in facts as well as in law in treating the sale of thechemical unit of the assessee company as itemised sale and not a slumpsale?Tribunal erred in facts as well as in law in treating the sale of thechemical unit of the assessee company as itemised sale and not a slumpsale? 2.Whether on the facts and in the circumstances of the case, the LearnedTribunal erred in law in deleting the addition of Rs.31,13,58,000/- madeby the assessing officer under section 50B read with section 2(42C) andexplanation 1 to section 2(19AA) of the Income Tax Act solely relying onthe submissions made by the assessee and ignoring the facts brought onrecord by the assessing officer as well as the detailed observation madeby the Commissioner of Income Tax (Appeals)?Tribunal erred in law in deleting the addition of Rs.31,13,58,000/- madeby the assessing officer under section 50B read with section 2(42C) andexplanation 1 to section 2(19AA) of the Income Tax Act solely relying onthe submissions made by the assessee and ignoring the facts brought onrecord by the assessing officer as well as the detailed observation madeby the Commissioner of Income Tax (Appeals)? 3.Whether on the facts and in the circumstances of the case, the LearnedTribunal erred in treating the sale of the chemical unit of the assesseecompany as itemised sale without considering the case laws relied uponby the revenue in the case of CIT Versus Narkeshari Prakashan Ltd.,reported in 196 ITR 438 and in the case of Accelerated Freeze Drying Co.Ltd. reported in 198 Taxmann 18 (Ker) which applies in the facts andcircumstances of the instant case ?Tribunal erred in treating the sale of the chemical unit of the assesseecompany as itemised sale without considering the case laws relied uponby the revenue in the case of CIT Versus Narkeshari Prakashan Ltd.,reported in 196 ITR 438 and in the case of Accelerated Freeze Drying Co.Ltd. reported in 198 Taxmann 18 (Ker) which applies in the facts andcircumstances of the instant case ? 4.Whether the impugned order is perverse, bad in law and a product ofnon application of judicial mind ?non application of judicial mind ? The assessee filed its return of income of the assessment year 2009-2010 which was processed under Section 143 (1) of the Act. Subsequently, 4.Whether the impugned order is perverse, bad in law and a product ofnon application of judicial mind ?non application of judicial mind ? The assessee filed its return of income of the assessment year 2009-2010 which was processed under Section 143 (1) of the Act. Subsequently, the case was selected for scrutiny and notices under Section 142(1) of theAct were issued and the case was discussed with the assessee. During theyear under assessment, the assessee company was engaged in activities ofmanufacturing and selling of chemicals, castings, steel, wagons, points andcrossings, jute and petrochemicals etc. During the scrutiny assessmentamong other things, the assessing officer noticed that the assessee companyis having various business units namely, railway wagon making unit, juteprocessing unit and chemical unit at Gujarat and Haldia (West Bengal).Each of these units was independent profit centres for which separatebooks of accounts were maintained by the assessee company. The assessingofficer found that the assessee company has sold its chemical unit at Haldiato M/s. Petro Carbons and Chemicals Pvt. Ltd. and the copy of theagreement was produced. On examining the agreement, the assessingofficer was of the view that the same qualified as a slump sale as definedunder Section 2(42C) of the Act and accordingly, proceeded to complete theassessment by an order dated 28[th] December, 2011. Aggrieved by such order the assessee preferred appeal before theCommissioner of Income Tax (Appeals)-VI, Kolkata [CIT(A)]. It wascontended that the finding of the assessing officer that the sale was a slumpsale was wholly unjustified since the sale was itemised sale and cannot betreated as a slump sale within the meaning of Section 2(42C) of the Act. Theassessee referred to the documents and the annexures to the documentswhereunder the sale took place to justify their case. Several decisions wererelied on. The CIT(A) by order dated 3[rd] December, 2012 did not agree with the assessee and confirmed the finding of the assessing officer and held thesale to be slump sale. Aggrieved by such order, the assessee preferredappeal before the Tribunal. The said appeal was allowed and aggrieved bysuch order the revenue is before us by way of this appeal. We have elaborately heard Ms. Sucharita Biswas, learned StandingCounsel appearing for the appellant revenue. The short question involved inthe present appeal is whether the sale effected by the assessee during theyear under consideration was a slump sale within the meaning of Section2(42C) of the Act. The learned Standing Counsel for the revenue wouldcontend that the assessee miserably failed to produce any document beforethe assessing officer to establish that the sale was not a slump sale orrather the sale was an itemised sale and in such circumstances theTribunal committed an error in taking note of the conduct of the assesseeboth before the assessing officer as well as before the CIT(A). Therefore, it is submitted that this Court while exercising jurisdictionunder Section 260A of the Act is entitled to consider whether there is anyerror committed by the Tribunal, more particularly a factual errorwarranting interference by this Court. At the first blush the submission ofthe learned Standing Counsel appears to be attractive but on a closescrutiny we find that the authorities as well as the Tribunal have examinedthe documents which were made available before it. The Tribunal aftergoing through the documents, more particularly the agreement and theaddendum to the agreement and Annexure J found that the unit itself wasnever sold and/or transferred as a going concern in toto but only assets of Therefore, it is submitted that this Court while exercising jurisdictionunder Section 260A of the Act is entitled to consider whether there is anyerror committed by the Tribunal, more particularly a factual errorwarranting interference by this Court. At the first blush the submission ofthe learned Standing Counsel appears to be attractive but on a closescrutiny we find that the authorities as well as the Tribunal have examinedthe documents which were made available before it. The Tribunal aftergoing through the documents, more particularly the agreement and theaddendum to the agreement and Annexure J found that the unit itself wasnever sold and/or transferred as a going concern in toto but only assets of the unit was sold and transferred to the purchaser on a pre-determined andagreed price for each type of assets being sold and transferred and theconsideration fixed for all the assets were not in lump sum. After noting thefactual position, the Tribunal has taken note of Section 2(42C) and heldthat the assessee entered into a memorandum dated 25[th] October, 2007followed by an addendum to the memorandum for sale of some of the assetsof the chemical unit at a pre-determined sale price for selling some of theassets belonging to the chemical unit at Haldia. Furthermore, the Tribunalfound from the memorandum as well as the addendum that the individualassets were determined and fixed at a pre-determined and agreed value andsuch price has been received by the assessee by different account payeecheques during the previous year relevant to the assessment year 2009-10.Further, on perusal of the balance-sheet, the Tribunal found that on thedate of transfer apart from the assets which were sold and transferred, thesaid chemical unit had several other assets which were never sold nortransferred to the purchaser. Furthermore, the Tribunal took note of thecrucial fact that none of the liabilities were transferred to the purchaser andthe same continued to be a liability of the assessee and to be dischargedand were discharged by the assessee. Therefore, the Tribunal in our view, rightly held that the sale cannotbe regarded as a slump sale. The Tribunal took note of the decision of thisCourt in the case of Kwality Ice Cream (India) Ltd. versus CIT reported at(2011)336 ITR 100 in which it was held that though the sale of theundertaking was for a lump sum consideration, Section 50 of the Act in respect of depreciable assets will override all other provisions and fordepreciable assets, the value has to be determined in accordance with theprinciples of block of assets, read with Section 43(6) of the Act. There areother decisions which were also noticed and referred to by the Tribunal.Thus, we find that the Tribunal has not committed any error of fact callingfor an interference by this Court. Learned Standing Counsel for the appellant revenue placed relianceon the decision of the Hon’ble Supreme Court reported in AIR 1976 SC 163(Afsar Shaikh and Another Versus Soleman Bibi and Others). This decisionhas been pressed into service for the proposition regarding the scope of thepower of the High Court under Section 100 of the CPC and as to how theHigh Court shall proceed while exercising such power. The learned StandingCounsel would submit that if the Tribunal has not determined the issue offact properly or it has determined the issue wrongly by reason of anyomission or error or defect then this Court in an appeal under Section 260Aof the Act would be entitled to interfere. In the preceding paragraphs we have pointed out the factual positionwhich has been taken note by the Tribunal. We find that there is noerroneous approach by the Tribunal nor can it be said that the Tribunal hasnot determined the issue of fact nor can it be said that the issue has beendetermined wrongly by reason of any illegality or omission or error for us tointerfere under Section 260A of the Act. It is pointed out by Mr. J.P. Khaitan, learned Senior Counselappearing for the respondent assessee that the Tribunal referred to a In the preceding paragraphs we have pointed out the factual positionwhich has been taken note by the Tribunal. We find that there is noerroneous approach by the Tribunal nor can it be said that the Tribunal hasnot determined the issue of fact nor can it be said that the issue has beendetermined wrongly by reason of any illegality or omission or error for us tointerfere under Section 260A of the Act. It is pointed out by Mr. J.P. Khaitan, learned Senior Counselappearing for the respondent assessee that the Tribunal referred to a decision of Tribunal of Kolkata Bench in the case of DCIT versus TonganiTea Co. Ltd. in ITA No.1233/Kol/2008 for assessment year 2000-1 dated6[th] November, 2015. It is submitted that the revenue carried the matter byway of an appeal before this Court in ITA No. 203 of 2016, which wasdismissed by judgment and order dated 29[th] June, 2018. Thus, for the above reasons, we find no merit in this appeal andaccordingly the appeal is dismissed and the substantial questions of law areanswered against the revenue. With the dismissal of the appeal, the connected application is alsodismissed. (T.S. SIVAGNANAM, J.) (HIRANMAY BHATTACHARYYA, J.) SN/D.GhoshAR(CR)