Law:

Section:

Section 50, read with section 50A, of the Income-tax Act, 1961 - Capital gains - Computation in case of depreciable assets - Assessment year 1998-99 - Assessee claimed loss under head 'Long-term capital loss' on sale of one of its division on slump sale basis by deducting from sale proceeds cost of acquisition of said division and improvement - Assessing Officer rejected assessee's claim holding that sale of said division was not a slump sale as technical know-how was separately sold on a later date and, therefore, by virtue of provisions of sections 50 and 50A, excess of sale consideration over written down value of block assets was liable to be taxed as short-term capital gain - On appeal, Commissioner (Appeals) as well as Tribunal allowed assessee's claim holding that when it was a sale of going concern, sale was slump sale even if right to use technical know-how developed by assessee was granted by assessee to transferee against payment of a separate consideration and, therefore, section 50 was not applicable - Whether view taken by Tribunal was consistent with settled-law and, therefore, was to be upheld - Held, yes FACTS The assessee claimed loss under the head 'Long-term capital loss' on the sale of one of its division on slump sale basis by deducting from the sale proceeds the acquisition cost of said division and cost of improvement. The Assessing Officer rejected the assessee's claim holding that by virtue of provisions of sections 50 and 50A, excess of sale consideration over the written down value of block of assets was liable to be taxed as short-term capital gain. The Assessing Officer also held that sale of said division was not slump sale as technical know-how was separately sold at a later date, i.e.., on 1-7-2000 while the rest of the undertaking had been sold on 1-7-1997. On appeal, the Commissioner (Appeals) set aside the order of the Assessing Officer and allowed the assessee's claim. On the revenue's appeal, the Tribunal held that sale is a slump sale if it is a sale of going concern even if some of the assets are retained by the transferor and, therefore, sale of one of its division by the assessee was a slump sale to which sections 50…

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