Grasim Industries Limited Vs DCIT (ITAT Mumbai)
ITAT Mumbai held that transfer of an undertaking under a court-approved scheme cannot be characterised as a slum sale within the meaning of section 2(42C) hence provisions of section 50B not attracted.
Facts- The assessee, a public limited company, has filed its return of income on 29/09/2010 declaring total income at Rs.1891,64,73,085/- under normal provisions of the Act. The assessee revised its return of income on 04/03/2011 declaring revised income at Rs.1893,36,29,773/-and on 23/03/2012 revising the income to Rs.1888,48,00,776/-, both under the normal provisions of the Act. The regular assessment in assessee’s case was completed on 24/02/2014 determining total income at Rs.2404,70,06,534/- by making various additions, thereby raising a demand of Rs.183,42,83,411/- . The aggrieved assessee filed appeal before the Ld. CIT(A), who partially allowed the appeal filed by the assessee. Aggrieved, both the assessee as well as the revenue filed the appeals before the Tribunal.
Conclusion- Hon’ble ITAT, Mumbai in Avaya Global Connect Ltd. has held that transfer of an undertaking under a Court-approved scheme of arrangement cannot be equated with a sale, and consequently section 50B does not apply. Accordingly, addition made u/s. 50B deleted.
Held that the transfer of the undertaking by the assessee cannot be characterised as a slump sale within the meaning of section 2(42C) of the Act as it stood at the relevant time. Consequently, the provisions of section 50B are not attracted. Accordingly, the action of the Ld. CIT(A) in treating the transaction as taxable under section 50B of the Act cannot be upheld. The assessee’s contention is accepted. The consideration received under the Scheme of Arrangement is to be treated as a capital receipt not chargeable to tax under section 50B of the Act. The ground raised by the assessee succeeds. The addition made under section 50B is deleted.
