Tuesday, January 19, 2016

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


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.

Revised monetary limit for filing appeal would also apply to pending references in High Court

The disputed issue before the High Court was as under:

Whether revised monetary limit of Rs.20 lacs as specified in CBDT's Circular No. 21/2015 shall apply to pending references in High Courts?

The High Court held as under:

1) To ensure that there is uniformity in respect of filing of appeals the CBDT has fixed threshold limits which would do away with the discretion of the officer to file and pursue the appeal remedy where the tax effect is less than the minimum amounts specified.

2) It is noteworthy that the Circular specifically provides that where the tax effect is higher than that specified in the Circular then the filing of appeal in such cases is to be decided on the merits of the case. Therefore, to enable the Revenue to focus on matters where the tax implication is above Rs.20 lacs only such matters should be agitated in appeal before the High Court according to the Circular.