23 January 2010
A company had taken a loan of Rs.5 crores from a Nationalised Bank. Now after so many years, since the Company had defaulted in prompt repayment, the Bank has taken over the posession of the 'WHOLE ASSETS' of the company EXCEPT CASH AND BANK BALANCES(under SARFAESI ACT). The liabilities, ofcourse, remain untouched. Now the bank has transferred an amount of around 80 lakhs to the current account of the company being the surplus realised. My doubt : Whether the above transaction can be treated as SLUMP SALE u/s 50B of the IT Act? My interpretation : As per Sec 2(42C), slump sale involves transfer of one or more undertakings for lump sum consideration without assigning value for individual items. In this case too, no individual value has been arrived by the Bank. But since only aseets have been taken over, can it be taken as the ASSET PART OF THE UNDERTAKING?
It is a cardinal principle of construction that every statute is prima facie prospective unless it is expressly or by necessary implication made to have retrospective operation The term slump sale is used when an undertaking or a business is sold without attributing separate values to each of the assets which are sold. In other words, if there is a sale of an undertaking or a business for a lumpsum price it is considered to be a slump sale. Section 2(42C) of the Act defines a "slump sale" to mean the transfer of one or more undertakings as a result of the sale for a lumpsum consideration without values being assigned to the individual assets and liabilities in such sale . In CIT vs. Mugneeram Bangur & Co. (Land Department),57 ITR 299 (SC), the Supreme Court was concerned with a problem arising on the sale of going concern. The firm had sold the business as a going concern with its goodwill and all stock in trade, etc., to a company for a lumpsum price.
The Supreme Court held that the sale was of a whole concern and no part of the price paid was attributable to the cost of land and no part of the price was taxable. In the words of the Court at page 305
It is a cardinal principle of construction that every statute is prima facie prospective unless it is expressly or by necessary implication made to have retrospective operation The term slump sale is used when an undertaking or a business is sold without attributing separate values to each of the assets which are sold. In other words, if there is a sale of an undertaking or a business for a lumpsum price it is considered to be a slump sale. Section 2(42C) of the Act defines a "slump sale" to mean the transfer of one or more undertakings as a result of the sale for a lumpsum consideration without values being assigned to the individual assets and liabilities in such sale . In CIT vs. Mugneeram Bangur & Co. (Land Department),57 ITR 299 (SC), the Supreme Court was concerned with a problem arising on the sale of going concern. The firm had sold the business as a going concern with its goodwill and all stock in trade, etc., to a company for a lumpsum price.
The Supreme Court held that the sale was of a whole concern and no part of the price paid was attributable to the cost of land and no part of the price was taxable. In the words of the Court at page 305
CAclubindia
