Commissioner Of Income Tax vs M/S Salora International Ltd. on 13 May, 2016

1. The Revenue has preferred the present appeal under Section 260A of

the Income Tax Act, 1961 (hereafter the „Act‟) assailing an order dated 2nd

August, 2002 passed by the Income Tax Appellate Tribunal (hereafter the

„Tribunal‟) in ITA No.1903/Del/2001. The aforesaid appeal (ITA

No.1903/Del/2001) was preferred by the Assessee against an order dated

22nd February, 2001 passed by the Commissioner of Income Tax (Appeals)

[CIT(A)] whereby the Assessee‟s appeal against an assessment order dated

ITA 12/2003 Page 1 of 28
29th March, 2000 for AY 1997-98 was rejected.

2. The controversy involved in the present appeal relates to

computation of capital gains arising from transfer of an undertaking by the

Assessee to a new company, M/s Matsushita Television & Audio India

Ltd., in terms of a scheme of arrangement sanctioned by this Court, under

Section 391-394 of the Companies Act, 1956. Whilst the Assessee claims

that it has incurred a short term capital loss of Rs.11,14,31,696/- on the sale

of the said undertaking, the Assessing Officer (hereafter „the AO‟) has

assessed the said transaction as resulting in a short term capital gain of

Rs.25,34,72,144/-. The principal dispute revolves around the quantum of

consideration for the sale of the said undertaking; according to the

Assessee, the consideration is Rs. 32,48,00,000/- but according to the AO,

it is Rs.50,12,00,000/-. Further, the Assessee has computed the capital loss

by taking the cost of the assets as Rs.59,94,36,171/- which according to the

AO should have been Rs.41,09,32,331/- being the Written Down Value

(hereafter „WDV‟) of the assets. The Revenue has not pressed its challenge

as to the cost of the assets for the purposes of calculation of capital gains.

Therefore, the only issue surviving in this appeal is the dispute as to the

quantum of consideration for the purposes of computation of capital gains

ITA 12/2003 Page 2 of 28
on transfer of the undertaking in question.

Source: Indian Kanoon

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