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2017 (11) TMI 566 - AT - Income TaxSlump sale - amount received by the assessee in lieu of transfer of the business leads to L & T Infotech Ltd. - accessibility to business income - whether sum could be categorized as an amount received in lieu of a slump sale transaction, which thus could be brought within the sweep of Sec. 50B? - Held that:- We find that the facts of the case revealed that the assessee had received an amount of ₹ 9,80,50,000/- (supra) in lieu of transfer of its business leads to L & T Infotech Ltd., which would in no way be held to constitute a 'Business activity' in itself. We are of the considered view that the facts that the aforesaid amount of ₹ 9,80,50,000/- was received by the assessee only for transfer of an individual asset, viz. its business leads can safely be gathered beyond doubt from the very fact that the other assets, viz. Computers (forming part of the block of assets) remained as such with the assessee. Similarly, we find that the business liabilities of the assessee, viz. Sundry Creditors of ₹ 1,03,68,351/- also remained with the assessee on 31.03.2003. We further find that the assessee had in the notes forming part of its accounts as on 31.03.2003, had in terms of Accounting Standard 18 (AS-18) in its 'Related party disclosures' therein categorically disclosed that the aforesaid amount of ₹ 9,80,50,000/- was received by it in lieu of transfer of its business rights to L& T Infotech Ltd.. We have deliberated on the facts of the case and after giving a thoughtful consideration to the same, are of the considered view that as the assessee had neither transferred an undertaking or any part of an undertaking, or a unit or division of undertaking or a business activity taken as a whole, but what have been transferred is an individual asset, viz. business leads, which does not constitute a business activity on its own, therefore, are unable to persuade ourselves to subscribe to the view of the lower authorities which had held that the amount of ₹ 9,80,50,000/- (supra) received by the assessee was liable to be characterized as a consideration received by the assessee pursuant to a slump sale as per the provisions of Sec. 50B of the 'Act'. We thus in the backdrop of our aforesaid observations set aside the order of the CIT(A) and therein conclude that the amount of ₹ 9,80,50,000/-(supra) had rightly been reflected by the assessee as a business income. Disallowance of the interest cost on the inter-company deposits - Held that:- Now when we have held that the amount of ₹ 9,80,50,000/- (supra) was liable to be brought to tax under the head business income, therefore, the disallowance by the A.O of the interest cost of ₹ 22,11,622/- on the intercompany deposits held by the assessee, for the reason that the same were attributable to the earning of income from transfer of business leads, which had been held to be liable to be assessed as "Slump sale", thus, cannot be sustained. Appeal of assessee allowed.
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