Articles
Where no monetary consideration
was involved in transfer of manufacturing division along with all its
assets and liabilities under amalgamation scheme, same could not be
considered as slump sale under section 50B
Facts:
a) The assessee transferred its manufacturing division to NIL under a scheme of amalgamation as per which all the assets and
liabilities of the assessee were vested in NIL;
b)
The assessee in return received certain investments held by NIL besides
allotment of equity shares to the shareholders of the assessee;
c)
The Assessing Officer held that the transfer of the manufacturing
division to NIL would tantamount to a 'slump sale' attracting liability
of capital gains under section 50B;
d) On appeal, the CIT(A) deleted the order of Assessing Officer. The aggrieved revenue filed the instant appeal.
The Tribunal held in favour of assessee as under:
1)
To qualify as slump sale two conditions have to be satisfied, viz., (A)
there must be transfer of one or more undertakings as a result of sale,
and (B) the sale should be for a lump sum consideration without values
being
assigned to the individual assets and liabilities;
2)
In the instant case it was not disputed that there was no monetary
consideration involved for transfer of the assets and liabilities of the
manufacturing division to NIL, though there might have been transfer of
an undertaking;
3)
Since there was no monetary consideration involved in transferring the
manufacturing division under scheme of amalgamation approved by the High
Court, it couldn’t be considered to be a slump sale so as to attract the
liability of the capital gain under section 50B – ITO V. ZINGER
INVESTMENTS (P.) LTD (2013) 38 taxmann.com 388 (Hyderabad - Trib.)