IN HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1723 OF 2016 Pr. Commissioner of Income Tax-5 Mumbai .. Appellant Versus M/s. Jindal Steel & Alloys Ltd. .. Respondents Mr. Sham Walve for appellant Mr. Hiro Rai with Subhash Shetty for respondents. CORAM : AKIL KURESHI & M.S.SANKLECHA, JJ. DATE : 20th February 2019. P.C. Taken up for final disposal with consent of learned Advocates for parties. 2] appeal is filed by Revenue to challenge judgement of Income Tax Appellate Tribunal (Tribunal for short). Following questions are presented for our consideration :- (A) Whether on facts and in circumstances of case and in law, Hon'ble ITAT was correct in law in holding that valuation report obtained by buyer of CRM division could at best be taken to be for purpose of reaching ::: Uploaded on - 25/02/2019 ::: Downloaded on - 26/02/2019 11:53:59 ::: YBG 2 902 itxa 1723 16 board enterprise value by buyer and could not be construed as assigning of sale values to individual assets and liabilities as understood for purpose of section 2(42C) of Income Tax Act, 1961? (C) Whether on facts and in circumstances of case and in law, Hon'ble ITAT was correct in law in holding that CRM division stood sold from effective date of 31/5/2007 mentioned in agreement and not from date of 4/9/2007 being date of registration of deed of transfer dated 11th June 2007? (E) Whether on facts and in circumstances of case and in law, Hon'ble ITAT was correct in deleting disallowance under section 14A read with Rule 8D made by Assessing Officer on ground that assessee had not earned any exempt income during year when assessee had made investments which were capable of yielding exempt income? 3] respondent assessee is registered company. This appeal arises out of assessment year 2008-09. first question raised by Revenue pertains to conclusions of Tribunal that assessee had sold its CRM division to one JSW Limited, by way of slump sale. Before Tribunal revenue contended that valuation of division under sale made by valuer was on basis of segregated valuation of individual assets. revenue, therefore, contended that sale in question cannot be treated as slump sale. Tribunal, however, held that sale in question ::: Uploaded on - 25/02/2019 ::: Downloaded on - 26/02/2019 11:53:59 ::: YBG 3 902 itxa 1723 16 was slump sale, finding fact that assets and liabilities of CRM division involved tangible as well as intangible were transferred to JSW as going concern. Tribunal noted that section 2(42C) of Act, defines expression slump sale as to mean transfer of one or more undertakings as result of sale for lumpsum consideration without values being assigned to individual assets and liability in such sales. Tribunal noted terms of agreement between assessee and purchaser of said unit in which expression "Unit" for purpose of deed of transfer was defined as to mean "all tangible and intangible assets and liabilities of entire unit". 4] In view of above position, we do not find that Tribunal has committed any error. sale in question was correctly held to be slump sale as defined in section 2(42C) of Act. Merely because for purpose of arriving at proper valuation for transfer of entire unit in valuation report obtained by purchaser, valuer assigned separate valuation to different parts of unit would not take away fact that what was sold by assessee was entire unit as going concern. No question of law, therefore, arises. ::: Uploaded on - 25/02/2019 ::: Downloaded on - 26/02/2019 11:53:59 ::: YBG 4 902 itxa 1723 16 5] second question raised by Revenue relates to effective date of sale of this unit. assessee contended all through out that effective date of sale was 31st May 2007. agreement was executed between parties on 11th June 2007 and was actually registered on 4th September 2007. revenue contends that sale would be effective from 4th September 2007. This question becomes relevant since unit in question was already in possession of JSW which was operating unit upon payment of conducting charges of Rs.50 lakhs per month to assessee. On this account, assessee stopped crediting such sum after 31st May 2007 contending that unit stood transferred from such date to JSW and, therefore, assessee no longer had any right to receive conducting charges from JSW Ltd. 6] A.O. took date of registration of deed of transfer as effective date on which unit stood transferred to purchaser. In appeal CIT (Appeal) gave partial relief holding that transfer was effected on 25 th June 2017 on basis that payment for sale was received on that date. We are informed that payment was made on 11 th June 2017 but actually credited in ::: Uploaded on - 25/02/2019 ::: Downloaded on - 26/02/2019 11:53:59 ::: YBG 5 902 itxa 1723 16 assessee's account on 25th June 2017. Tribunal gave full relief to assessee holding that unit stood transferred on 31st May 2007. Tribunal noted that agreement refers to date of 31st May 2007 as effective date of transfer of unit. Both sides have interpreted such agreement in this manner. It was, thereafter, not possible for A.O. to shift effective date of transfer. 7] We do not find that Tribunal has committed any error. agreement in question referred to effective date of transfer as 31st May 2007. Tribunal records that written agreement which was executed couple of months later and was registered some time thereafter, would not make any difference. issue can be looked from slightly different angle. date assessee stopped claiming income arising out of conducting charges of said unit after 31st May 2007, surely purchaser JSW would also have stopped claiming expenditure towards such charges. If both sides have accordingly acted in terms of clear understanding, revenue authority had no reason or even power to shift such date. That too, in case of only one party i.e. recipient of income. 8] This brings us to sole surviving question of ::: Uploaded on - 25/02/2019 ::: Downloaded on - 26/02/2019 11:53:59 ::: YBG 6 902 itxa 1723 16 disallowance of expenditure made in terms of section 14A of Act read with Rule 8D of Income Tax Rules. Tribunal deleted additions made by AO and confirmed order of CIT on ground that assessee had during relevant period under consideration not earned any exempt income. Tribunal in that view of matter referred to and relied upon decision of Gujarat High Court in case of CIT Vs. Corrtech Energy Pvt. Ltd. (2014) Taxman 130(Guj) and deleted additions made by A.O. 9] We notice that before A.O. assessee has not raised such contention. We are informed that before CIT (Appeal) such contention was raised. However, same was not dealt with. Tribunal has merely made one line declaration that assessee had not earned any exempt income. We do not find any reasons for for refraction of Tribunal's examination on accounts of assessee before coming to such conclusion. 10] Under circumstances, we would request Tribunal to re-examine this question and give fresh finding with brief reasons. We are not disputing Tribunal's conclusion that if assessee had not earned any exempt income disallowance under ::: Uploaded on - 25/02/2019 ::: Downloaded on - 26/02/2019 11:53:59 ::: YBG 7 902 itxa 1723 16 section 14A read with Rule 8D could not have been done. This is what this Court in judgement dated 30th January 2019 in Income Tax Appeal No.1619 OF 2016 in case of Pr. Commissioner of Income Tax Vs. Huntsman International (India) Pvt. Ltd. has held. For this limited issue appeal is restored to file of Tribunal. With these observations appeal is disposed of. (M.S.SANKLECHA, J.) (AKIL KURESHI, J) ::: Uploaded on - 25/02/2019 ::: Downloaded on - 26/02/2019 11:53:59 ::: Pr. Commissioner of Income-tax-5, Mumbai v. Jindal Steel & Alloys Ltd