2015 (5) TMI 312 - HC - Income Tax

Slump sale of a going concern - whether slump price cannot be brought to tax under section 50 as held by AO especially when the assessee continued to own some of com pany assets ? - Held that - Two appellate courts on consideration of the entire material on record have concurrently held that the sale is a slump sale and while coming to the said conclusion, they have relied on the orders passed by the Tribunal in connection with the sister concern of the assessee. They have also followed the judgment of in the cases of CIT v. Mugneeram Bangur and Co. (Land Department) 1965 (3) TMI 22 - SUPREME Court and also the decision of Syndicate Bank Ltd. v. Addl. CIT 1985 (3) TMI 48 - KARNATAKA High Court . Under these circumstances, we do not see any merit in these appeals. - Decided in favour of the assessee. The assessee has also preferred cross-objections to the appeals. This court in the case of Smt. Jyoti Kumari v. Asst. CIT 2010 (2) TMI 942 - Karnataka High Court has held that an appeal being a creature of a statute, a cross-objection in terms of rule 22 being barred with an appeal, until and unless there is express provision on settling the legal provisions one cannot hold that the implication or a right of cross-objection should be read into either the provisions of Order 42 read with sections 100 and 108 of the Code of Civil Procedure or under the provisions of sub-section (7) of section 260A of the Income-tax Act. Therefore, it is held that the cross-objection is not maintainable under section 260A of the Income-tax Act - Decided in favour of assessee.

Summary

Issues involved:
1. Whether the consideration amount received by the assessee for a slump sale of a going concern should be taxed under section 50 of the Act when the assessee retained some company assets.

Detailed Analysis:
The Revenue filed appeals against the Tribunal's order affirming that the sale was a slump sale and capital gains should be computed accordingly. The substantial question of law was whether the consideration amount of Rs. 2.2 crores received by the assessee was for a slump sale and not taxable under section 50 of the Act, considering the assessee still owned some company assets post-sale. The assessee transferred part of its business to another company and did not offer the consideration received to tax. The assessing authority found that not all assets were sold, leading to the conclusion that it was not a slump sale. The Commissioner of Income-tax (Appeals-I) held it was a slump sale based on similar cases and judgments. The Tribunal also affirmed this decision, citing precedents and apex court rulings. The appeals were dismissed as both appellate courts concluded it was a slump sale based on the entire material on record and previous judgments.

2. Whether cross-objections filed by the assessee are maintainable under section 260A of the Income-tax Act.

Detailed Analysis:
The assessee filed cross-objections, but the court held that cross-objections were not maintainable under section 260A of the Income-tax Act based on a previous judgment. The court dismissed the cross-objections following the ruling that cross-objections are not permissible under the mentioned section. As a result, both the appeals and cross-objections were dismissed, along with any pending applications.