TaxTMI 
TaxTMI 
2014 (5) TMI 512
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....as filed by the assessee on 31st October, 2005. Subsequently, the case was selected for scrutiny for issue of statutory notice under Section 143 (2) of the Income Tax Act, dated 26th October, 2006 which was served on the assessee. The notice under Section 143(2) was issued on 26th October, 2006 and was served on the assessee on 27th October, 2006. The notice under Section 143(1) of the Income Tax Act, 1961 along with the questionnaire was issued.The Assessing Officer, inter alia, disallowed the claim of the assessee observing that transfer of its Lift Division is an exchange and not a sale and, therefore, not liable to tax. The Assessing Officer held that in Section 2(24C) of the Income Tax Act, the term 'slump sale' has been defined. The transaction in this case is squarely falling within this definition. Therefore, the Assessing Officer held that the transfer of Lift Division is a slump sale and was taxable in terms of Section 50B of the Income Tax Act. It was taxed accordingly. 4. This order of the Assessing Officer was confirmed by the Commissioner of Income Tax (Appeals). The Tribunal has reversed it in allowing the assessee's appeal. 5. Mr. Suresh Kumar, lea....
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.... the revenue in the case of Rotork Controls Pvt. Ltd. v/s Commissioner of Income Tax, reported in (2009) 314 ITR 62 (SC). 8. Mr. Mistry submits that, insofar as the deletion of the addition on account of the long term capital gains from the transfer of Lift Division is concerned, even that question cannot be said to be a substantial question of law. Mr. Mistry has invited our attention to the order passed by the Tribunal and submits that the view taken by the Tribunal is in consonance with law and the factual materials placed on record. The factual material placed on record would indicate that the transaction or transfer cannot be said to be a slump sale. For slump sale, the transfer has to be by way of sale. In the present case, the Lift Division of the assessee has been transferred to other Company and in consideration of the same that other Company issued preference shares to the assessee. There was no price in money and which was paid and received. The value of the shares, therefore, could not have been taken as the basis. The Assessing Officer erroneously assumed that the value of the shares is the price or monetary consideration for the transfer. The Tribunal has corrected....
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....e gains would have been brought in to tax in terms of this provision. 14. The definition of the term "slump sale" in Section 2(42C) reads as under: "Sec.2(42C): 'Slump sale' means the transfer of one or more undertakings as a result of the sale for a lump sum consideration without values being assigned to the individual assets and liabilities in such sales. Explanation 1: For the purpose of this 'undertaking' shall have the meaning assigned to it in Explanation 1 to Clause (19AA). Explanation 2: For the removal of doubts, it is hereby declared that the determination of the value of an asset or liability for the sole purpose of payment of stamp duty, registration fees or other similar taxes or fees shall not be regarded as assignment of values to individual assets or liabilities." 15. This definition together with the explanations, has been referred by the Tribunal in paragraph 37 of its order. Thereafter the Tribunal analyzed the transaction/transfer in the present case in the backdrop of the legal principles. The Tribunal referred to the judgment of the Hon'ble Supreme Court in the case of Commissioner of Income Tax, Andhra Pradesh v/s Motors & G....
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....ee company nor is it alleged that the particular form of the transaction was adopted as a cloak to conceal a different transaction. It is not disputed that the document in question was intended to be acted upon and there is no suggestion of mala fides or that the document was never intended to have any legal effect. In the absence of any suggestion of bad faith or fraud the true principle is that the taxing statute has to be applied in accordance with the legal rights of the parties to the transaction. When the transaction is embodied in a document the liability to tax depends upon the meaning and content of the language used in accordance with the ordinary rules of construction. In Bank of Chettinad Ltd. v/s Commissioner of Income Tax it was pointed out by the Judicial Committee that the doctrine that in revenue cases the "substance of the matter" may be regarded as distinguished from the strict legal position, is erroneous. If a person sought to be taxed comes within the letter of the law he must be taxed, however great the hardship may appear to the judicial mind to be. On the other hand, if the Crown seeking to recover the tax cannot bring the subject within the letter of the l....
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....decide the nature of the transaction. To call a payment a loan if it is really an annuity does not assist the taxpayer, any more than to call an item a capital payment would prevent it from being regarded as an income payment if that is its true nature. The question always is what is the real character of the payment, not what the parties call it. Secondly, a transaction, which on its true construction is of a kind that would escape tax, is not taxable on the ground that the same result could be brought about by a transaction in another form which would attract tax." 17. In the light of the principles laid down in the above referred decision, the Tribunal concluded in paragraph 40 that the Scheme of Arrangement approved by this Court in the present case, cannot be said to be a sale of the Lift Division or undertaking by the assessee. The Tribunal referred to Clause 3.1 of the Scheme. It then referred to Clause 1.36 in its entirety. Then, it referred to Clause 14.1 of the Scheme. 18. The Tribunal then held that, a reading of the clauses in the Scheme of Arrangement shows that the transfer of the undertaking has took place in exchange for issue of preference shares and bonds. I....
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....esh Kumar, learned counsel appearing for the revenue in support of this appeal. Mr. Suresh Kumar submits that the order of the Tribunal runs contrary to the law laid down in the judgment of the Delhi High Court. The Delhi High Court has considered the matter in the light of the amendments made to the Income tax Act, 1961, particularly, by the Finance Act, 1999, with effect from 1st April, 2000. 24. We see no force in the contention of Mr. Suresh Kumar. Firstly, it is not necessary for us to decide any wider question or larger controversy. The judgment of the Delhi High Court would apply provided the transfer is by way of a sale. Before the Delhi High Court, facts were that the petitioner Company was engaged in project financing through term loans and leasing in specified sectors. For the assessment year 2009-2010, the petitioner had disclosed loss of more than Rs.76 crores in their return. No return was filed for the assessment year 2010-2011. The book loss was more than Rs.72 crores. An application was filed before the Settlement Commission for the two assessment years and disclosing additional income. The Settlement Commission passed an order and which is termed as final order....