The Commissioner of Income Tax, Ahmedabad vs Equinox Solution Pvt Ltd - Supreme Court
The Commissioner of Income Tax, Ahmedabad vs Equinox Solution Pvt Ltd. - Supreme Court Important Judgment 2017 -
On 18th April, 2017, in the case of The Commissioner of Income Tax, Ahmedabad, vs Equinox Solution Pvt Ltd.[Civil Appeal No.4399 of 2007], it was held that Section 50(2) of the Income Tax Act “applies to a case where any block of assets are transferred by the assessee but where the entire running business with assets and liabilities is sold by the assessee in one go”, such sale cannot be considered as “short-term capital assets”.
“In other words, the provisions of Section 50(2) of the Act would apply to a case where the assessee transfers one or more block of assets, which he was using in running of his business. Such is not the case here because in this case, the assessee sold the entire business as a running concern.” It was held that the case of the respondent (assessee) did “not fall within the four corners of Section 50(2) of the Act” and “that the entire running business with all assets and liabilities having been sold in one go by the respondent-assessee, it was a slump sale of a “long-term capital asset”. It was, therefore, required to be taxed accordingly.”