Case Law Details
M/s. Oricon Enterprises Limited Vs ACIT (ITAT Mumbai)
Issue to be decided is as to whether the transaction entered in to by the assessee was a sale or was an exchange.Clause 2.3 of the BTA reads as under:
“In consideration for the purchase of the Division,the purchaser shall,at Closing,issue to the seller 29,90,000 fully paid up shares of the purchaser of the face value of Rs.10/- each.”
Considering the above,we hold that the it was a case of exchange and not of sale.The agreement clearly states that the assessee would be getting 29.9 lakhs shares of OCL.There is no doubt that the BTA talks of seller and purchaser at so many places,but the terms used in any agreement has to be seen in the context. It is said that entries in books of accounts or agreements are not conclusive-what has to be seen is the real nature of the transaction.We find that there is no mention of any money,in the BTA,to be received or paid by the parties concerned.The BAT speaks of ‘issue of 29,90,000 fully paid up shares’.Therefore,we have no hesitation in holding that shares cannot be termed cash and that until and unless money is paid a transaction cannot be termed a sale.In commercial and business worlds,it is a well recognised principle that one of the mode to transfer of assets is exchange and it is different from sale.In other words,both the terms cannot be equated.Section 2(42C)and section 50B talk of sale consideration.As the assessee had received shares and not money in lieu of the transferred packaging divisons,so,the disputed transaction cannot be termed a sale or slump sale.We also hold that it was legally justified post Bharat Bijalee Ltd. case to argue before the FAA that it was a case of exchange of assets and that it was not liable to pay tax on Rs. 24.40 crores.
FULL TEXT OF THE ITAT JUDGMENT
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