TaxTMI 
TaxTMI 
TaxTMI 
2019 (8) TMI 145
X X X X Extracts X X X X
X X X X Extracts X X X X
....Ground No. 4 and accordingly, Ground No. 4 is dismissed as not pressed. 4. The facts of the case are that during the year, the assessee company had earned other income of Rs. 8,71,03,872/-. It included Rs. 8,18,69,674/- being profit on sale of one of its business units pursuant to an agreement dated 28/03/2003 as a going concern. As per provisions of section 50B of the Act, inserted by the Finance Act, 1999 introduced w.e.f. 01/04/2000, profits and gains from transfer under slump sale of assets shall be deemed to be capital gain arising from the transfer of long term capital assets. Hence, the gains on transfer of the interest chargeable to tax under "Capital Gains" but the same was treated as business receipts. The Assessing Officer rejected the contention of the assessee that though the sale had arisen on the transfer of the business undertaking, this can be treated only as short term capital gains. According to the Assessing Officer, as per 2(42C) and explanation to clause 19AA of the said section, the transfer will be regarded as a slump sale and gain can be treated as long term capital gain. 5. On appeal, the CIT(A) observed that judgment of the Supreme Court in the case o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sessed as capital gain but only as business income. 6.1 In support of his contention, the learned A.R. relied on the decision of the Supreme Court in the case of Equinox Solution Pvt. Ltd. 150 DTR 137 wherein it was held as under: "11. In our considered opinion, the case of the respondent (assessee) does not fall within the four corners of section 50(2) of the Act. Section 50(2) applies to a case where any block of assets are transferred by the assessee but where the entire running business with assets and liabilities is sold by the assessee in one go, such sale, in our view, cannot be considered as "short-term capital assets". In other words, the provisions of section 50(2) of the Act would apply to a case where the assessee transfers one or more block of assets. Which he was using in running of his business. Such is not the case here because in this case, the assessee sold the entire business as a running concern." 7. On the other hand, the Ld. DR relied on the order of the CIT(A). 8. We have heard the rival submissions and perused the record. First of all it is to be seen what a "slump sale" is all about. Sec. 2(42C) of the IT Act, which is applicable from 1st April, 20....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g and restructuring its loans and debts with the creditors to the satisfaction of the TRANSFEREE, The TRANSFEROR represents that it has been negotiating with financial institutions/banks for settlement of it overdue loans borrowed earlier for its manufacturing and export operations, which have caused severe erosion to its net worth over the years. For this reason, the TRANSFEROR is also unable to plan any further investment into the business which otherwise is imperative for growing and developing its export markets. The TRNSFEROR is therefore desirous to sell and the TRANSFEREE with a view to strategically expand the export of value-added marine products is interested in acquiring the TRANSFEROR'S seafood Business Undertaking at Kuthiathode, Thuravoor P.O., Alappuzha District 688 532, Kerala, on a 'going concern' basis subject to the TRANSFEROR securing agreement from the financial institution/banks for takeover and immediate settlement thereafter by the TRANSFEREE of the TRANSFEROR'S loans/debts including outstanding interest as described herein. The TRANSFEROR and the TRANSFEREE have executed a Memorandum of Understanding dated 4 February 2003 pursuant t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the TRANSFEREE by way of delivery of physical possession on the Closing Date and which the TRANSFEREE hereby acknowledges to the TRANSFEROR and there is no further additional act or deed required to be done for this purpose by or between the TRANSFEROR and the TRANSFEREE. 2.4 The TRANSFEROR and TRANSFEREE hereby further confirm and declare that all Immovable Assets that are owned by the TRANSFEROR stand sold and transferred by the TRANSFEROR to the TRANSFEREE and the TRANSFEROR agrees and undertakes to execute and register within 30 days from the Closing Date, such conveyance deeds, instruments, agreements and other documents that the TRANSFEREE may reasonably require to perfect its title to the Immovable Assets, subject to procuring necessary approval or consent of the concerned governmental or competent authorities. 2.5 The TRANSFEROR and the TRANSFEREE further confirm and declare that the Intellectual Property Rights also stand transferred and assigned by the TRANSFEROR to the TRANSFEREE along with the Goodwill and the TRANSFEROR shall execute in favour of the TRANSFEREE separate Deed of Assignment of Trade Mark and other requisite documents within 30 days hereof. 2.6 F....