THE COMMISSIONER OF INCOME TAX, AHMEDABAD versus EQUINQX SOLUTION PVT LTD.

Citation: [2017] 4 S.C.R. 94 · Decided: 18-04-2017 · Supreme Court of India · Bench: R.K. AGRAWAL · Disposal: Dismissed

Judgment (excerpt)

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[2017]4 S.C.R. 94 . 
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THE ·coMMISSIONER OF INCOME TAX, AHMEDABAD .· ·. 
v. 
· . EQUINQX SOLUTJQN PVT LTD .. 
(Civil Appeal No. 4399 of2007) 
APRIL rs,2017 
. [R. K. AGRAWAL AND ABHAYMANOHAR SAPRE, JJ.] 
li1com~ •Tax Act, ]961 '- ss. 50(2), • 48(2) -Applicability of-· . 
Sale of entire runnbig· btisiness 1vith assets ai1d liabilities in one go 
if amounts toshimp sale ofa ''long ter/11 capita/asset".- Responcfent· 
C · · as$essee sold its e1itire .run11ing businesS in one go aiidclaimed 
deduction ulsA8(2) t1;eating such sale as .slump sale in the 11alure of 
a long term capita/gain~ A~·sessing Officer.rejected the exe11iptio11 
clainied holding that the case of the assessee wils covered uls. 50(2) 
as it was in the nature of short term capital. gain ~ Appeal by 
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respondei1t before. CIT (Appeal),· allowed holding·. that. the 
undertaking itself was a capital asset, owned by respondent for six 
years, being in the nature of long .term capital asset and the same 
having been so/din one go as a running concern cannot be tent1ed 
. as short tern1 capital gain~ Appeals byRevimue, dis1i1issed by !TAT · 
and High Court - On appeal, held: The case of the respondent 
·does not fall within the four corners of s.50 (2) - Provisions of s, · 
50 {2) would apply to a case whei·e the asfossee tran~fers one or · 
more block of assets, which he was Using in running ofhis business 
- However, when the. entire running b11~·iness with all assets and 
liabilities are sold in. one go,. as .d0i1e by theresponcfent;. i(is a. 
slump sale of lJ "long~term capital asset" and not of. "short term 
capital asset" ..- It was, therefore, required to be taxed accordiilgly 
- No fault found in the reasoning and.the cimclusion arrived atby · · 
CIT (Appeal) whjch was rightly· upheld by the· Tribuiial a114 High 
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• Dismissing the appeal, the Court• 
HELD: L The case of the respond~nt (assessee) does 
not fall within the four comers of Section 50 (2) of the Income 
ACt. Section 50 (2) applies to a case where any block of assets · 
are. transferred .by the assessee but lVhere th~ entire. runqing 
business with assets arid .liabilities is. sol~.· by the assessee. in one, 
·.· .. THECOM~ISSIONEROF INCOME TAX, AHMED ABAD v .•.• ··· .•.. 
EQUINOX SOLUTION PVT. LTD.· 
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go, such sale, cannot be considered as• "shotMerlit w1pitai assets". 
·.·in other words, the·. provisions. of Section SO (2) of the Act would 
apply to a case where the as~essee transfers oue or 1.nore block 
of assets, whlch he was using in running of his b~siness. ·Such is 
not the case here because in this case; the assessee· sold the 
entire business as a running concern, [Para lll(97~E~FJ . . . 
Commissioner of Income Tax,· Gujarat· v. Artex 
··'Manufacturing Co. 1997 (6)SCC 437 CIT : [1997] 1 
Suppl. SCR 608 - relied on. 
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P,.emierAutomobilesLt{l. V. lnqome Tax Officer & A1ir. 
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)64 ITR 193 (Bombay) ~·approved; 
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·• .. [1997l lSllppl.'SCR 608 
264 I1'R 193 (Bombay) . · approved 
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·.··. CiVIL APPELLATE JURISDICTION: Civil AppeaINo. 4399 
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FromJhe Judgment and Order dated 29.07.2003 of the High Cotirt 
of Gujarat at Ahmedabad in Income TaxAppeal No. 59 of2003. 
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. K. Radhakrislma, Sr. Adv., Rupesh Kumar, Ms~ Sln¥eta Garg{fbr 
· · .. · Mrs; Anil Katiyar),Advs. for the Appellant. 
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. · Inde~ Paul Bansal, Vivek Bansal, Haresh Raichura, Ms. Saroj. 
Raichura, Advs. for the Respondents: . 
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.. , . . ·. Tlw Judginent of the Cow1 was delivered by . 
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A:BIIAYMANOHAR SAP RE, J. I. This appeal is filed by the . F 
Revenue(lncome TaxDepartinent) against the order dated 29.07.2003 
.. passed l:Jy the High Court of Gujarat atAhmedabadin LT.A. No. 59 of 
·. · 2003 whereby the High Court dismissed the Revenue;s appeal on the 
. ground that the appeal does not involve any substantial question of law 
under Se(;tion 260-A of the Income Tax Act; 1961 (hereinafter referred 
to as "the Act'l 
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· · 2. We herein setoutthe facts, hi brief; t~ ap~reciate the issues 
it\volved in this appeai. 
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3. The respondent-assessee was engaged· in. the business of . 
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manufacturing sheet metal components out of CRPA & OP sheds at · H 
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