Transfer of an undertaking in consideration of allotment of shares is exchange not sale

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

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