Non-Monetary Asset Transfer Is Not A Slump Sale U/s. 50B

In the light of ratio laid down as above by the Hon’ble Supreme Court and the Tribunal since there is no monetary consideration involved in transferring the manufacturing division with all its assets and liabilities to M/s. Novapan Industries Ltd. under scheme of amalgamation approved by the Hon’ble High Court of A.P. it cannot be considered to be a slump sale within the meaning ascribed under section 2(42C) of the Act so as to attract the liability of the capital gain under section 50B of the Act.

INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCHES “A” : HYDERABAD

BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER
AND
SHRI SAKTIJIT DEY, JUDICIAL MEMBER

ITA.No. 275/Hyd/2013
Assessment Year 2007- 2008

The ITO Vs. M/s. Zinger Investments (P)

Date of Hearing : 12.06.2013
Date of pronouncement: 21.08.2013

ORDER

PER SAKTIJIT DEY, J.M.

This appeal is filed by the Revenue against the Order of the CIT(A)-IV, Hyderabad dated 10.12.20 12 for the assessment year 2007-2008.

2. Briefly the facts are that the assessee- company earlier known as M/s. GVK Novapan Industries Pvt. Ltd. is a Private Limited Company. For the impugned assessment year, the assessee filed its return of income declaring NIL income. Initially, the return was processed under section 143(1) on 05.02.2009. Subsequently, action was initiated under section 147 of the Act by issuing a notice under section 148 calling upon the assessee to submit a return of income. In response to such notice, the assessee filed a letter dated 30.12.20 10 requesting the Assessing Officer to treat the return filed originally as a return in response to the notice under section 148 of the Act. In the course of assessment proceedings, the Assessing officer noticed that during the year under dispute, the assessee had transferred its manufacturing division to M/s. Novapan Industries Limited under a scheme of amalgamation approved by the Hon’ble High Court of A.P. w.e.f. 01.04.2006. It was further noticed that as on 3 1.03.2006 the assessee- company had total assets of Rs.32 19.89 lakhs and total liabilities of Rs. 2538.67 lakhs. Hence, the net worth of the assessee- company was Rs.68 1.22 lakhs. The Assessing Officer further noted that as per the scheme of amalgamation both the assets and the liabilities were transferred by the assessee company to M/s. Novapan Industries Limited. As a consideration for the transfer of the division the amalgamated company M/s. Novapan Industries Limited allotted 38 shares for every 100 shares of the amalgamated company. Besides allotment of shares, the amalgamated company M/s. Novapan Industries Limited also transferred certain investments held by it amounting to Rs.25,24,05,000/- to the assessee company. The balance-sheet of the assessee company as on 31.03.2007 shows share capital of Rs.6,28,07,500/- and reserve amount of demerger at Rs. 18,42,87,883/-.