Sale of 100% shareholding in subsidiary Co. could not be treated as 'Slump Sale'

Facts

a) The assessee-co. sold its entire shareholding in its subsidiary co. 'UHEL' to a third party.

b) Assessee worked out capital gains under section 48 on such transaction.

c) The Assessing Officer(‘AO’) opined that the said transaction would amount to slump sale of an undertaking and capital gains had to be computed under section 50B.



d) The Commissioner (Appeals) upheld the order of Assessing Officer.

e) Aggrieved-assessee filed the instant appeal before the Tribunal.

Held

1) As per section 2(42C),transfer of shares will not result into transfer of undertaking making it a slump sale for section 50B.

2) If impugned transaction would be regarded as slump sale, the consideration should have been received by UHEL, and not by the assessee because it was UHEL which had been transferred and being a distinct legal entity it was entitled for the sale consideration on its transfer. However, this was not the case since the sales consideration was received by assessee on transfer of shares of UHEL.

3) What the assessee had transferred was the shares in UHEL and this transfer of shares could not be considered as slump sale of an undertaking within the provisions of section 2(42C).[2016] 65 taxmann.com 161 (Mumbai - Trib.)