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2019 (8) TMI 659 - HC - Income TaxSlump sale - whether the alleged agreement of transfer was a genuine one or an eyewash? - Revenue contended that it was not so because the entire undertaking was not sold. Some assets like cash in the bank and the insurance claim had been left out - whether the gain or profit would be computed as a short term capital gain or a long term capital gain or something else? - the Revenue contended that due to “excluded assets” mentioned in the agreement, it is not a slump sale HELD THAT:- Agreement of transfer was a genuine one or an eyewash - The first issue was purely a question of fact. The tribunal analysed the terms of the transfer agreement in detail and came to the conclusion that it was a bona fide agreement of transfer for a consideration. We are not minded to interfere with that finding. Transaction in question was a slump sale - The second issue was also a pure question of fact. The tribunal came to the finding that the sale consideration of the undertaking as a whole has been fixed at a “slump price” of ₹ 70.00 Crores without specifying any specific value to any asset. The assets transferred includes tangible as well as intangible asset. Moreover, the seller i.e. the assessee has also agreed for not carrying on the similar business of manufacturing and marketing of urea fertilizer for a period of 10 years. Hence, it is a case of “slump sale” of undertaking as a going concern and not the sale of depreciable assets within the meaning of Section 50. Taking everything into account, the conclusion reached by the tribunal is a plausible one. It does not call for any interference. The learned tribunal also held that since the collection of assets of the undertaking included intangibles like goodwill, intellectual property etc. their cost of acquisition could not be determined. This was also a finding of fact which is a plausible one. We do not wish to interfere with the same. Gain or profit would be computed as a short term capital gain or a long term capital gain or something else - Section 45 provides that profits or gains from the transfer of a capital asset would be chargeable to income tax as capital gains. This gain is deemed to be the income in the financial year in which the transfer was effected. Undoubtedly, the transfer of the undertaking in question was a transfer of a collection of almost the entire assets of the undertaking and hence transfer of capital. The question is whether this capital gain was to be taken as long term capital gain or short term capital gain and if it was impossible to calculate capital gain, was it to be taken as something else? Mr. Bajoria has relied on a single decision of the Supreme Court in PNB Finance Ltd. Vs. CIT [2008 (11) TMI 7 - SUPREME COURT]. We have discussed the ratio of that decision. The facts of this appeal are similar to that case. We are bound by it and have to apply it. We dismiss the appeal. The first and second questions in this appeal are answered in the affirmative for the assessee and against the revenue.
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