January 2010
S. 50B r.w. S. 2(19AA) and S. 2(42C) — Basic condition to be satisfied to qualify as slump sale is that there should be a transfer of undertaking i.e., either business as a whole is transferred or any part of undertaking or unit or division of undertaking
By C. N. Vaze, Shailesh Kamdar, Jagdish T. Punjabi, Chartered Accountants
Reading Time 2 mins
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36. (2009) 32 SOT 183 (Mum.)
Duchem Laboratories Ltd. v. ACIT
A.Y. : 2000-01. Dated : 12-6-2009
S. 50B r.w. S. 2(19AA) and S. 2(42C) — Basic condition to
be satisfied to qualify as slump sale is that there should be a transfer of
undertaking i.e., either business as a whole is transferred or
any part of undertaking or unit or division of undertaking is transferred.
During the year, the assessee sold its business of hospital
products pursuant to a business transfer agreement. The Assessing Officer held
that such sale was a transfer of assets and liabilities relating to
identifiable parts of a business and was not a transfer of business as a
whole, for attracting the provision of S. 50B. The CIT(A) upheld the Assessing
Officer’s order.
The Tribunal held in favour of the assessee. The Tribunal
noted as under :
(1) The purchase price agreed between the parties was a
comprehensive purchase price for the sale of business. There was no
apportionment of purchase price to the different assets and liabilities
being taken over.
(2) A perusal of the business transfer agreement and the
schedules attached thereto confirmed that the intention of the parties was
to sell the entire business as a whole and no particular consideration was
attributed to any particular asset or liability transferred.
(3) The steps taken by the assessee clearly reflected
that the line of business sold by the assessee was an identifiable line of
business being carried on by the assessee from year to year and all the
transactions, rights and liabilities in connection with the said line of
business were transferred by the assessee to the purchaser.
(4) The transfer of business was as an ongoing concern
and the amount received for the transfer of inventory, contract, licence
agreements, accounts receivables including vendor lists, etc., relating to
the business would fall within the definition of ‘slump sale’ and was to be
considered for computation of capital gains in line with the provisions of
S. 50B.
