| COURT: | Supreme Court |
| CORAM: | Abhay Manohar Sapre J, R. K. Agrawal J |
| SECTION(S): | 45, 48, 50 |
| GENRE: | Domestic Tax |
| CATCH WORDS: | capital gains, Depreciation, long-term capital asset, short-term capital gains, slump sale |
| COUNSEL: | Inder Paul Bansal |
| DATE: | April 18, 2017 (Date of pronouncement) |
| DATE: | April 21, 2017 (Date of publication) |
| AY: | 1991-92 |
| FILE: | Click here to view full post with file download link |
| CITATION: | |
| S. 45/ 50(2): If an undertaking is sold as a running business with all assets and liabilities for a slump price, no part of the consideration can be attributed to depreciable assets and assessed as a short-term capital gain u/s 50(2). If the undertaking is held for more than three years, it constitutes a "long-term capital asset" and the gains are assessable as a long-term capital gain | |
In our considered opinion, the case of the respondent (assessee) does not fall within the four corners of Section 50 (2) of the Act. Section 50 (2) applies to a case where any block of assets are transferred by the assessee but where the entire running business with assets and liabilities is sold by the assessee in one go, such sale, in our view, cannot be considered as “short-term capital assets”. In other words, the provisions of Section 50 (2) of the Act would apply to a case where the assessee transfers one or more block of assets, which he was using in running of his business. Such is not the case here because in this case, the assessee sold the entire business as a running concern
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