Case Law Details
Caborandum Universal Limited Vs ACIT (Madras High Court)
On facts, when we examine the Business Sale Agreement, it is not disputed by the parties that the full and final consideration is Rs.325,000,000/- after having agreed upon the full and final consideration, the parties agreed to retain a particular amount of money in an Escrow account which cannot be construed to take away the case of the assessee from the expression ‘accrued’ occurring in Section 48 of the Act.
Therefore, the above decisions relied on by the revenue will clearly explain that the conduct of the assessee and the purchaser in retaining a particular amount of money in the Escrow account cannot take away the amount from the purview of full consideration received/accruing in favour of the assessee for the purpose of computation of capital gains under Section 48 of the Act. As already pointed out, the assessee has received the entire amount of Rs.325,000,000/- without any deduction. Even going by the case as projected by the assessee, the amount of Rs.3.25 Crores is retained in an Escrow account and the right of the assessee has not been disputed and that amount was retained to cover four contingencies which are part of the indemnity clause and assuming certain payoffs were to be made from the retention money that will not in any manner alter the full and total consideration received by the assessee pursuant to the Business Sale Agreement and if such is the factual position, undoubtedly, the entire sale consideration had accrued in favour of the assessee during the assessment year under consideration. Even assuming that certain payments have been made from the amount retained in the Escrow account, it will not make or in any manner reduce the cost of acquisition.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
This appeal, by the appellant/assessee, filed under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), is directed against the order dated 03.06.2009, made in I.T.A.No.594/Mds/2007 on the file of the Income Tax Appellate Tribunal, Chennai Bench (for brevity “the Tribunal”) for the assessment year 2003-04.
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