Reportable IN SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL No.4399 OF 2007 Commissioner of Income Tax, Ahmedabad .Appellant(s) VERSUS Equinox Solution Pvt. Ltd. Respondent(s) JUDGMENT Abhay Manohar Sapre, J. 1) This appeal is filed by Revenue (Income Tax Department) against order dated 29.07.2003 passed by High Court of Gujarat at Ahmedabad in I.T.A. No. 59 of 2003 whereby High Court dismissed Revenue s appeal on ground that appeal does not involve any substantial question of law under Section 260-A of Income Tax Act, 1961 (hereinafter referred to as Act ). 2) We herein set out facts, in brief, to appreciate issues involved in this appeal. Signature Not Verified Digitally signed by ANITA MALHOTRA 3) respondent-assessee was engaged in business of Date: 2017.04.18 17:34:56 IST Reason: manufacturing sheet metal components out of CRPA & OP 1 sheds at Ahmadabad. respondent decided to sell their entire running business in one go. With this aim in view, respondent sold their entire running business in one go with all its assets and liabilities on 31.12.1990 to Company called "Amtrex Appliances Ltd" for Rs.58,53,682/-. 4) respondent filed their income tax return for Assessment Year 1991-1992. In return, respondent claimed deduction under Section 48 (2) of Act as it stood then by treating sale to be in nature of "slump sale" of going concern being in nature of long term capital gain in hands of assessee. (5) Assessing Officer by his order dated 04.03.1994 did not accept contention of assessee in claiming deduction. According to Assessing Officer, case of assessee was covered under Section 50 (2) of Act because it was in nature of short term capital gain as specified in Section 50 (2) of Act and hence did not fall under Section 48 (2) of Act as claimed by assessee. Assessing Officer accordingly reworked claim of deduction treating same to be falling under Section 50 (2) of Act and framed assessment order. 2 (6) assessee, felt aggrieved, filed appeal before CIT (appeals). By order dated 06.10.1995, Commissioner of Appeals allowed assessee s appeal in so far as it related to issue of deduction. He held that when it is undisputed fact that assessee has sold their entire running business in one go with its assets and liabilities at slump price and, therefore, provisions of Section 50 (2) of Act could not be applied to such sale. He held that it was not case of sale of any individual or one block asset which may attract provisions of Section 50 (2) of Act. He then examined case of assessee in context of definition of "long term capital gain" and "short term capital asset" and held that since undertaking itself is capital asset owned by assessee nearly for six years and being in nature of long term capital asset and same having been sold in one go as running concerned, it cannot be termed short terms capital gain so as to attract provisions of Section 50 (2) of Act as was held by Assessing Officer. CIT (appeals) accordingly allowed assessee to claim deduction as was claimed by them before Assessing Officer. 7) Revenue, felt aggrieved of order of CIT (appeal), filed appeal before Income Tax Appellate 3 Tribunal. By order dated 27.06.2002, Tribunal concurred with reasoning and conclusion arrived at by Commissioner of Appeal and accordingly dismissed Revenue's appeal. 8) Revenue, felt aggrieved of order of Tribunal, carried matter to High Court in further appeal under Section 260-A of Act. By impugned order, High Court dismissed appeal holding that appeal does not involve any substantial question of law within meaning of Section 260-A of Act. It is against this order Revenue felt aggrieved and carried matter to this Court in appeal by way of special leave. 9) Heard Mr. K. Radhakrishnan, learned senior counsel for appellant and Mr. Inder Paul Bansal, learned counsel for respondent-assessee. 10) Having heard learned Counsel for parties and on perusal of record of case, no fault can be found in reasoning and conclusion arrived at by CIT (appeal) in his order which, in our view, was rightly upheld by Tribunal and then by High Court calling no interference by this Court in this appeal. 4 11) In our considered opinion, case of respondent (assessee) does not fall within four corners of Section 50 (2) of Act. Section 50 (2) applies to case where any block of assets are transferred by assessee but where entire running business with assets and liabilities is sold by assessee in one go, such sale, in our view, cannot be considered as short-term capital assets . In other words, provisions of Section 50 (2) of Act would apply to case where assessee transfers one or more block of assets, which he was using in running of his business. Such is not case here because in this case, assessee sold entire business as running concern. 12) As rightly noticed by CIT (appeal) that entire running business with all assets and liabilities having been sold in one go by respondent-assessee, it was slump sale of long-term capital asset . It was, therefore, required to be taxed accordingly. 13) Our view finds support with law laid down by this Court in Commissioner of Income Tax, Gujarat vs. Artex Manufacturing Co. [1997(6) SCC 437 CIT]. 14) In Premier Automobiles Ltd. vs. Income Tax Officer & 5 Anr., 264 ITR 193 (Bombay) also, Division Bench of Bombay High Court examined this question in detail on somewhat similar facts and has taken same view. Learned Judge S.H Kapadia - (as His Lordship then was as Judge of Bombay High Court and later became CJI) speaking for Bench aptly explained legal position to which we concur as it correctly summarized legal position applicable to such facts. 15) Learned Counsel for appellant (Revenue) was not able to cite any decision taking contrary view nor was he able to point out any error in decisions cited at Bar by assesse s counsel referred supra. 16) In light of foregoing discussion, we find no merit in appeal which fails and is accordingly dismissed. J. [R.K. AGRAWAL] J. [ABHAY MANOHAR SAPRE] New Delhi; April 18, 2017 6 ITEM NO.1A COURT NO.10 SECTION IIIA (For Judgment) SUPREME COURT OF INDIA RECORD OF PROCEEDINGS Civil Appeal No(s). 4399/2007 COMMNR. OF INCOME TAX, AHMEDABAD Appellant(s) VERSUS EQUINOX SOLUTION PVT. LTD. Respondent(s) Date : 18/04/2017 This appeal was called on for pronouncement of today. For Appellant(s) Mrs. Anil Katiyar,Adv. For Respondent(s) Mr. Inder Paul Bansal,Adv. Mr. Vivek Bansal,Adv. Ms. Saroj Raichura,Adv. Mr. Kalp Raichura,Adv. Mr. Haresh Raichura,Adv. Hon'ble Mr. Justice Abhay Manohar Sapre pronounced Reportable judgment of Bench comprising Hon'ble Mr. Justice R.K.Agrawal and His Lordship. appeal is dismissed in terms of signed Reportable judgment. Pending application, if any, stands disposed of. (Anita Malhotra) (Chander Bala) Court Master Court Master (Signed Reportable judgment is placed on file.) 7 Commissioner of Income-tax, Ahmedabad v. Equinox Solution Pvt. Ltd