Digital Insight India Products Private Limited Vs ACIT (ITAT Mumbai)
ITAT Mumbai held that all the conditions of slump sale as provided under section 2(42C) of the Income Tax Act read with section 50B of the Act is satisfied. Accordingly, benefit of section 50B granted and AO directed to compute the business income accordingly.
Facts- Assessee, a subsidiary of Digital Insight Corp, USA, is a captive service provider which was engaged in providing 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.
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.
During the assessment proceedings, AO treated the slump sale transaction as business transaction and added back the lump sum consideration of INR.22.40 Crores to the business income of the Assessee-Company. CIT(A) partly allowed the appeal preferred by the Assessee vide order, dated 31/07/2024, and restricted the addition to INR.7,99,04,486/-. Being aggrieved, both assessee and revenue has preferred the present appeal.
