Slump sale under tax law requires monetary consideration; a share-for-transfer scheme was held outside Section 50B.

A transfer of an undertaking under a court-approved scheme of arrangement, satisfied only by allotment of equity shares and not by monetary consideration, was not a slump sale under Section 2(42C) read with Section 50B of the Income-tax Act, 1961. The court held that a sale for Section 50B requires a lump sum monetary price, whereas a share-based transfer may amount to an exchange and cannot be treated as a contractual sale merely because the scheme used the word "consideration." It also held that there is no estoppel in tax law, so the assessee could raise the pure legal plea at the appellate stage. The appeal succeeded and the slump sale assessment was set aside.

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Issues: Whether the transfer of the assessee's non-transmission and distribution business under a court-approved scheme of arrangement, in consideration of allotment of equity shares, amounted to a slump sale taxable under Section 50B of the Income-tax Act, 1961, and whether the assessee was barred from raising the alternate contention that the transaction was not a sale.

Analysis: Section 50B applies only where there is a slump sale, which in turn requires a transfer of an undertaking as a result of sale for a lump sum monetary consideration. A transfer by allotment of shares, without monetary consideration, is legally distinguishable from a sale and may amount to an exchange. The use of the expression "consideration" in the scheme does not by itself convert the transaction into a sale. The Court also held that there is no estoppel in tax law and that the assessee was not precluded from raising a pure legal contention at the appellate stage when all material facts were already on record. The court-approved scheme of arrangement effected a statutory transfer and could not be treated as a contractual sale merely because the parties had described the transfer in commercial terms.

Conclusion: The transaction was not a slump sale within the meaning of Section 2(42C) and Section 50B of the Income-tax Act, 1961, and the assessee was entitled to raise the alternate legal plea.

Final Conclusion: The tax appeal succeeded and the assessment of the transfer as a slump sale was set aside.

Ratio Decidendi: A transfer of an undertaking under a sanctioned scheme of arrangement, discharged exclusively by allotment of shares and not by monetary consideration, is not a slump sale under Section 50B of the Income-tax Act, 1961; a taxpayer is not estopped from raising such a legal contention even if a different stand was taken earlier.

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