|COURT:||Delhi High Court|
|CORAM:||Najmi Waziri J, Ravindra Bhat J|
|CATCH WORDS:||capital gains, slump sale, undertaking|
|DATE:||November 22, 2016 (Date of pronouncement)|
|DATE:||December 8, 2016 (Date of publication)|
|FILE:||Click here to download the file in pdf format|
|S. 2(42C)/ 50B: The fact that certain assets of the "undertaking" are left out of the sale transaction because it would cause inconvenience for the purchaser does not mean that the transaction is not a "slump sale". To expect a purchaser to buy and pay value for defunct or superfluous assets flies in the face of commercial sense|
(i) The sale transaction was reported for a total consideration of Rs.45.83 crores. The sale was for a going concern, which included ongoing service contracts, employment contracts and other tangible assets, and intangible assets such as technical know-how etc. To expect a purchaser to buy and pay value for defunct or superfluous assets flies in the face of commercial sense. Unfortunately, the Revenue’s understanding is that in a going concern the buyer is bound to pay good money, transact and purchase bad and irrecoverable debts. Not only does it fly in the face of common and commercial understanding, but it is not even a pre-condition , as is evident from the definition of “undertaking”, cited in Explanation (1) to Section 2 (19) (A) of the Act.
(ii) This definition of “undertaking” is what has been engrafted into by reference, under Section 2(42C) of the Act. Therefore, if certain assets or properties are left out because they would cause inconvenience or lead to some kind of a trouble for the purchasing party, it is well within its right to exclude it from the list of assets.
sec 1(2)(19A) is clear, as is judged here.
take an old man do you not value of his previous educational attainments and work achievements under experience or exposure,same way is the going concern perception.
Always experience count of anything in any field. tks