{"id":4744,"date":"2012-04-18T08:44:00","date_gmt":"2012-04-18T08:44:00","guid":{"rendered":"http:\/\/itatonline.org\/archives\/?p=4744"},"modified":"2012-04-18T08:44:00","modified_gmt":"2012-04-18T08:44:00","slug":"srei-infrastructure-finance-ltd-vs-itsc-delhi-high-court-s-50b-slump-sale-need-not-be-a-sale-all-slump-transfers-are-covered","status":"publish","type":"post","link":"https:\/\/itatonline.org\/archives\/srei-infrastructure-finance-ltd-vs-itsc-delhi-high-court-s-50b-slump-sale-need-not-be-a-sale-all-slump-transfers-are-covered\/","title":{"rendered":"SREI Infrastructure Finance Ltd vs. ITSC (Delhi High Court)"},"content":{"rendered":"\n\n
Click here to download the judgement (srei_infrastructure_slump_sale_capital_gains.pdf) <\/strong> <\/a><\/p><\/td>\n<\/tr>\n<\/table>\n


\nS. 50B: \u201cSlump Sale\u201d Need Not Be A \u201cSale\u201d. All Slump Transfers Are Covered
\n<\/strong><\/p>\n

The assessee entered into a scheme of arrangement u\/s 391-394 of the Companies Act, 1956 pursuant to which it transferred its project finance business and assets based financing business to another company for a lumpsum consideration of Rs. 375 lakhs. The assessee filed a settlement application in which it claimed that the said consideration on transfer of the project finance business was not chargeable to tax as it was not by way of “sale” and there was no cost of acquisition for the same<\/em>. However, the Settlement Commission that the said transfer, though effected through an order of the Court was a \u201cslump sale\u201d and was chargeable to tax u\/s 50B<\/em>. The assessee filed a Writ Petition to challenge the Settlement Commission\u2019s order. HELD by the High Court dismissing the Petition:<\/p>\n

The assessee\u2019s argument that a \u201ctransfer\u201d under a scheme of arrangement u\/s 391-394 of the Companies Act is not a \u201cslump sale\u201d for purposes of s. 50B is not acceptable. S. 50B was inserted to supercede decisions which held that a slump sale (i.e. transfer of business as a going concern) was not taxable for want of cost of acquisition. The term \u2018slump sale\u2019 is defined in s. 2(42C) to mean the \u201ctransfer\u201d of an undertaking as a result of a \u201csale\u201d. The use of the word \u2018transfer\u2019 in s. 2(42C) is significant and any type of \u201ctransfer\u201d which is in nature of slump sale i.e. when lump sum consideration is paid without values being assigned to individual assets and liabilities is covered by s. 2(42C) and s. 50B<\/strong>. This is the reasonable, plausible and natural grammatical meaning which has to be given to the definition of \u2018slump sale\u2019. It is not correct to construe the word \u2018slump sale\u2019 to mean that it applies to \u2018sale\u2019 in a narrow sense<\/strong> and as an antithesis to the word \u2018transfer\u2019 as used in s. 2(47). The intention of the legislature was to plug in the gap and tax slump sales and not to leave them out of the tax net. The term \u2018slump sale\u2019 has been used in the enactment to describe a particular and specific type of transfers called slump sales. The use of the word \u2018sale\u2019 in the term \u2018slump sale\u2019 does not narrow down the concept of \u2018transfer\u2019 as defined and understood in s. 2(47)<\/strong>. All transfers in the nature of \u2018sales\u2019 i.e. \u2018slump sales\u2019 are covered by s. 2 (42C).<\/p><\/blockquote>\n

\nNote<\/strong>: See the contra view in Avaya Global Connect<\/a><\/strong> 122 TTJ 300 (Mum) & Bharat Bijilee Limited<\/a><\/strong> (ITAT Mumbai) that transfers u\/s 391-394 of the Companies Act are not covered by s. 50B\n<\/div>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

The assessee\u2019s argument that a \u201ctransfer\u201d under a scheme of arrangement u\/s 391-394 of the Companies Act is not a \u201cslump sale\u201d for purposes of s. 50B is not acceptable. S. 50B was inserted to supercede decisions which held that a slump sale (i.e. transfer of business as a going concern) was not taxable for want of cost of acquisition. The term \u2018slump sale\u2019 is defined in s. 2(42C) to mean the \u201ctransfer\u201d of an undertaking as a result of a \u201csale\u201d. The use of the word \u2018transfer\u2019 in s. 2(42C) is significant and any type of \u201ctransfer\u201d which is in nature of slump sale i.e. when lump sum consideration is paid without values being assigned to individual assets and liabilities is covered by s. 2(42C) and s. 50B<\/strong>. This is the reasonable, plausible and natural grammatical meaning which has to be given to the definition of \u2018slump sale\u2019. It is not correct to construe the word \u2018slump sale\u2019 to mean that it applies to \u2018sale\u2019 in a narrow sense<\/strong> and as an antithesis to the word \u2018transfer\u2019 as used in s. 2(47). The intention of the legislature was to plug in the gap and tax slump sales and not to leave them out of the tax net. The term \u2018slump sale\u2019 has been used in the enactment to describe a particular and specific type of transfers called slump sales. The use of the word \u2018sale\u2019 in the term \u2018slump sale\u2019 does not narrow down the concept of \u2018transfer\u2019 as defined and understood in s. 2(47)<\/strong>. All transfers in the nature of \u2018sales\u2019 i.e. \u2018slump sales\u2019 are covered by s. 2 (42C)<\/p>\n

Read more ›<\/a><\/div>\n

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