Sale of business in lieu of shares under an amalgamation scheme not a ‘slump sale’

ITO V. ZINGER INVESTMENTS (P.) LTD (2013)

Where no monetary consideration was involved in transfer of manufacturing division along with all its assets and liabilities under amalgamation scheme, same could not be considered as slump sale under section 50B

Here in this case, the assessee transferred its manufacturing division under a scheme of amalgamation and received back certain investments held by the other company besides allotment of equity shares to the shareholders of the assessee.The Assessing Officer held that the transfer of the manufacturing division would tantamount to a 'slump sale' attracting liability of capital gains under section 50B. On appeal, the CIT(A) deleted the order of Assessing Officer. The aggrieved revenue preferred appeal 

The Tribunal held in favour of assessee that since there was no monetary consideration involved in transferring the manufacturing division under scheme of amalgamation approved by the High Court, it couldn’t be considered to be a slump sale so as to attract the liability of the capital gain under section 50B