For the above section:<\/em><\/strong><\/p>\n\n\n\n The definition of slump sale under section 2(42C)<\/strong> of the Income Tax Act, 1961 (‘IT Act’) is restricted to only transfer resulting from sale and it does not include transfers under section 2(47)<\/strong> of the IT Act.<\/p>\n\n\n\n The court held that if the entire running business is sold in one go, it is also considered as slump sale. It is a long term capital gain taxable under section 50B<\/strong>.<\/p>\n\n\n\n Slump sale and slump exchange are two terms which are debatable.<\/p>\n\n\n\n Slump exchange has become the popular mode of restructuring as it is implemented quickly.<\/p>\n\n\n\n However, the Income Tax act has refused to recognize at it came under judicial scrutiny, due to the amendment<\/a> which came in the year 2000 in the IT Act 1961. The amendment incorporated the Section 2(42C)<\/strong> and 50B<\/strong>.<\/p>\n\n\n\n In this case the court held that any transfer of undertaking for the exchange of bonds or shares of the transferee company would not constitute sale and it is thereby not slump sale and hence cannot be taxed under Section 50B<\/strong>.<\/p>\n\n\n\n In this case the court held that transfer of ongoing undertaking in consideration of the equity shares and debentures will not attract capital gain tax under section 50B<\/strong>. It is difficult to calculate cost of acquisition of such sale. It is neither sale nor slump sale. It is case of slump exchange.<\/p>\n\n\n\n The issue in the above case was an exchange of assets on the fair value between the company and its subsidiary is not sale but slump exchange.<\/p>\n\n\n\n After distinguishing the sale from exchange in case of slump. Another highlighted question is when the court approves no scheme of arrangement through court order which is neither consensual transfer or contract of sale.<\/p>\n\n\n\n SERI Infrastructure<\/p>\n\n\n\n In this case the Delhi High Court held that court approved scheme of arrangement is different scheme as per the companies act it is not transfer under the Income Tax Act<\/strong>.<\/p>\n\n\n\n As Per Gaar (General Anti-Avoidance Rules)<\/strong><\/p>\n\n\n\n The rationale of entering in the slump exchange has to be cleared. Such transactions are covered mostly by the group entities, in order to unlock shareholder<\/a> value, regulatory requirements etc.<\/p>\n\n\n\n The idea is to stop the itemized sale of the assets and for receiving the consideration in the format of shares.<\/p>\n\n\n\n![\"Slump](\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/12\/image001-10.png\")
<\/figure>\n\n\n\nJudgments on Slump Sale<\/h2>\n\n\n\n
How Slump Sale Is Different From Slump Exchange?<\/h2>\n\n\n\n
![\"How](\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/12\/How-Slump-Sale-Is-Different-From-Slump-Exchange.png\")
<\/figure>\n\n\n\nWhy Slump Exchange Is Not Recognized<\/h2>\n\n\n\n
![\"Why](\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/12\/image005.png\")
<\/figure>\n\n\n\nJudgments of The Various High Courts Where Slump Exchange Was Rejected<\/h2>\n\n\n\n
Slump Transaction By Court Order?<\/h2>\n\n\n\n
Conclusion<\/h2>\n\n\n\n