Slump sale capital gains include transferred land, preventing separate taxation when a later conveyance deed formalises title.

Capital gains arising from a slump sale of an entire undertaking, including a specified immovable property, are computed under Section 50B in the year of the slump sale. Where the property was included in the transferred undertaking and the resulting gain was already taxed, a later registered conveyance deed that formalises title does not create a separate taxable transfer. Treating registration as a fresh event for capital gains purposes would result in double taxation of the same transfer. The article notes that the registration-based principles for standalone immovable-property transfers do not apply where the undisputed transaction was a transfer of a going concern through a slump sale.

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Issues: Whether capital gain could again be taxed in Assessment Year 2016-17 on registration of a conveyance deed for the Bhiwandi land, when that land had already formed part of a slump sale of the entire business undertaking offered to tax under Section 50B of the Income-tax Act, 1961 in Assessment Year 2013-14.

Analysis: The Bhiwandi land was specifically included in the assets transferred under the slump sale agreement dated 14.07.2012 by which the entire undertaking was transferred as a going concern for a lump-sum consideration. The assessee had disclosed that slump sale in Assessment Year 2013-14, computed capital gains under Section 50B of the Income-tax Act, 1961, and paid tax thereon. The later registered conveyance deed executed in Assessment Year 2016-17 was treated as a step taken to perfect and formalise title to one immovable asset already forming part of the undertaking transferred earlier. The reliance placed by the revenue on principles governing transfer of immovable property by registered conveyance was held inapposite because the present case arose from a slump sale of an entire undertaking and the revenue had not disputed that slump sale as a transfer of a going concern. Once the gain on the undertaking, including the subject land, had been subsumed in the Section 50B computation and subjected to tax in the earlier year, isolating the same land for fresh capital gains taxation in the year of registration would amount to taxing the same transfer twice.

Conclusion: No separate capital gain was chargeable in Assessment Year 2016-17 on registration of the conveyance deed for the Bhiwandi property; the issue was decided in favour of the assessee and the addition was directed to be deleted.

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