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TMI Blog2025 (5) TMI 691X X X X Extracts X X X X X X X X Extracts X X X X ..... or "the Company" or "the Appellant") respectfully craves, leave to prefer an appeal under Section 253(1)(a) of the Income-tax Act, 1961 ("the Act") against the order dated 31 July 2024 ('Impugned Order") passed by the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre ["CIT(A)"] upholding order passed by the Assistant Commissioner of Income-tax, Circle 6(2)(2), Mumbai ('Ld. AO") dated 23 November 2019 issued under Section 143(3) of the Act, on the following grounds: 1. The order of the learned CIT(A)/Ld. AO is based on incorrect application of facts and wrong interpretation of law and therefore, is bad in law. 2. The learned CIT(A)/ Ld. AO has grossly disregarded the facts submitted by the Appellant and erred in law by violating the principles laid down under Section 50B of the Act, in treating the slump sale transaction as income under the head "Profits and gains of business or profession 3. The learned CIT(A)/ Ld. AO has erred, in law and on facts, in treating the transaction of slump sale of business as "business sale" and not "slump sale" of business and thereby. has erred, in law and on facts, in treating net gain arising on slump sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng software services to Digital Insight Corp, USA. During the relevant previous year, the Assessee entered into a 'Business Sale and Purchase Agreement', dated 24/03/2017, with NCR Corporation India Pvt. Ltd. [for short "the Buyer"]. The contention of the Assessee is that the aforesaid transaction was in the nature of "Slump Sale" for a lumpsum consideration of INR 22.40 Crores. However, the entire sale consideration was not received by the end of the relevant previous year, therefore, the Trade Receivables of INR.22.40 Crores, and 22.01 Crores were reflected in the Balance Sheet of the Assessee as on 31/03/2017 and 31/03/2018, respectively. The Assessee filed revised return of income for the Assessment Year 2017-2018, on 29/06/2018 declaring gross total income of INR.11,57,39,368/- comprising of business income of INR.3,57,22,844/-, Long term Capital Gains from slump sale amounting to INR.7,99,04,490/- and Income from Other Sources of INR.1,12,034/-. The case of the Assessee was selected for regular scrutiny. During the assessment proceedings vide notice, dated 17/10/2019, the was asked to explain why INR.44,41,91,261/- [sales consideration receivable amounting to INR.22,4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7/2024, and restricted the addition to INR.7,99,04,486/-. 3.3. Now, both, Assessee as well as the Revenue are in appeal before the Tribunal against the order, dated 31/07/2024, passed by the CIT(A). The contention of the Assessee is that the income offered to tax by the Assessee by treating the transaction as slump sale and taking benefit of Section 50B should be accepted, whereas the Revenue contends that the addition made by the Assessing Officer should be restored. The grounds raise by the Assessee and the Revenue are reproduced in paragraph 2 above. All the grounds, being connected, are taken up for consideration together hereinafter. 4. We have considered the rival submission, have perused the material on record and examined the position in law in view of the submissions advanced. 4.1. It is admitted position that during the relevant previous year, the Assessee sold its business for sum of INR.22.40 Crores. The Assessee treated the transaction as a "Slump Sale" and availed the benefit of the provisions of Section 50B of the Act. 4.2. The Assessing Officer took a view that the transaction was business sale (and not a slump sale). Therefore, the Assessing Officer added the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stone, Mumbai - 400013 and principal place of business at Building 3A, 3rd Floor, RMZ Eco Space, Bellandur, Outer-Ring Road, Bangalore-560103. (Seller). (2) NCR CORPORATION INDIA PRIVATE LIMITED (CIN U28111KA1996PTC020333) having registered office at Niton Building, 11, Palace Road, Bangalore - 560052 (Buyer). BACKGROUND: A The Seller owns the Assets and Liabilities and carries on the Business. B As part of an internal reorganisation, the Seller wishes to sell, convey, assign, transfer and deliver to Buyer, and the Buyer wishes to purchase, acquire, assume and accept from the Seller, all right, title, interest in and to the Business as conducted within India, together with all its properties, assets, investments, liabilities, rights, benefits, interest and obligations, as a going concern on an "as is where is basis" by way of a Slump Sale in accordance with Section 2(42C) of the Income-tax Act, 1961, on the terms set out in this agreement. IT IS AGREED: 1. DEFINITION AND INTERPRETATION 1.1 Definition In this Agreement the following definitions apply: "Purchase Price" means INR.22,40,00,000/- (Rupees Two Hundred Twenty Four Million Only) and as adjusted in accordan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not be borne by Buyer. The Seller agrees to indemnify the Buyer against any demand raised/recovery proposed on the buyer in relation to such liabilities. 2.1.5 The Buyer agrees that it shall maintain separate books and records with respect to the Business of the Seller from and after the Completion Date within the same legal entity. 2.1.6 Until the Completion Date, Seller is entitled to operate its Business and shall be solely liable for all the responsibilities and running expenses including salaries etc. pertaining to its Business including statutory, legal or any other liability. All operating profit or loss from the operations of Seller's Business along with Assets and Liabilities will belong to Seller up to the Completion Date. 3. PURCHASE PRICE AND ASSUMPTION OF LIABILITIES 3.1. Assumption of liabilities by the Buyer The Buyer must pay, satisfy and discharge all debts, Liabilities and obligations of the Seller relating to or arising from the conduct of the Business and ownership of the Assets and outstanding on, or accrued up to, the Completion Date (including the liability of the Seller for taxation in respect of profits earned in any period ending before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , assume a liability of the Assessee/seller relating to or arising from the conduct of the business and ownership of the assets and outstanding on, or accrued up to, the Completion Date (including the liability of the Assessee/seller for taxation in respect of profits earned in any period ending before the Completion Date whether or not the Liability to pay that taxation has arisen). Therefore, we reject the contention of the Revenue that a portion of the liabilities pertaining to the undertaking were retained by the Assessee. 4.8. As regards, receivables of INR.22.40 Crores as reflected in the Balance Sheet of the Assessee for the relevant previous year is concerned, we find that the same represents the purchase consideration receivable by the Assessee in terms of the Agreement and not the receivables pertaining to the undertaking transferred by the Assessee by way of slump sale. Therefore, the conclusion drawn by the Assessing Officer and the CIT(A) that the Assessee had retained a part of the assets is factually incorrect. 4.9. Further, the reliance placed by the CIT(A) on Form 3CEA is clearly misplaced. In terms of Section 50B(3) of the Act an Assessee undertaking the slump s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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