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Pr. Commissioner of Income Tax -16 v/s UTV Software Communication Ltd.


Company & Directors' Information:- R S SOFTWARE (INDIA) LTD. [Active] CIN = L72200WB1987PLC043375

Company & Directors' Information:- C K SOFTWARE PRIVATE LIMITED [Active] CIN = U72501DL2000PTC106184

Company & Directors' Information:- E N COMMUNICATION PRIVATE LIMITED [Active] CIN = U92132DL2005PTC143469

Company & Directors' Information:- T C COMMUNICATION PRIVATE LIMITED [Active] CIN = U74999DL2000PTC105354

Company & Directors' Information:- K K SOFTWARE PRIVATE LIMITED [Active] CIN = U72900DL2009PTC193030

Company & Directors' Information:- J J COMMUNICATION PRIVATE LIMITED [Active] CIN = U74300WB1997PTC085828

Company & Directors' Information:- A K C SOFTWARE PRIVATE LIMITED [Active] CIN = U72200DL2004PTC128462

Company & Directors' Information:- P. K. COMMUNICATION PRIVATE LIMITED [Strike Off] CIN = U92141DL1984PTC017748

Company & Directors' Information:- T I COMMUNICATION PRIVATE LIMITED [Active] CIN = U51109HP2009PTC031079

Company & Directors' Information:- P AND P SOFTWARE PRIVATE LIMITED [Active] CIN = U74899DL1994PTC057212

Company & Directors' Information:- SOFTWARE INDIA PRIVATE LIMITED [Active] CIN = U72200GJ1995PTC025791

Company & Directors' Information:- N. D. SOFTWARE PRIVATE LIMITED [Strike Off] CIN = U72200TG1998PTC029778

Company & Directors' Information:- T AND H SOFTWARE PRIVATE LIMITED [Active] CIN = U72200UP2000PTC025638

Company & Directors' Information:- S B M COMMUNICATION PRIVATE LIMITED [Strike Off] CIN = U64201WB2010PTC145582

Company & Directors' Information:- P N COMMUNICATION P. LTD. [Active] CIN = U32204DL2001PTC111327

Company & Directors' Information:- A B AND U COMMUNICATION PRIVATE LIMITED [Strike Off] CIN = U74300MH1997PTC107160

Company & Directors' Information:- M S SOFTWARE PRIVATE LIMITED [Active] CIN = U72200DL2005PTC133997

Company & Directors' Information:- G A S SOFTWARE PRIVATE LIMITED [Active] CIN = U72200DL2004PTC127546

Company & Directors' Information:- B B SOFTWARE LTD [Strike Off] CIN = L30009WB1995PLC072361

Company & Directors' Information:- H K SOFTWARE PRIVATE LIMITED [Strike Off] CIN = U72200WB2001PTC093967

Company & Directors' Information:- J SOFTWARE PRIVATE LIMITED [Strike Off] CIN = U72200TZ2000PTC009229

Company & Directors' Information:- K S M SOFTWARE PRIVATE LIMITED [Active] CIN = U72200DL2004PTC128463

Company & Directors' Information:- R B SOFTWARE PRIVATE LIMITED [Active] CIN = U72200DL2005PTC140322

Company & Directors' Information:- K AND D COMMUNICATION LIMITED [Active] CIN = U64120GJ1997PLC031879

Company & Directors' Information:- SOFTWARE INDIA PRIVATE LIMITED [Active] CIN = U72200RJ1995PTC010577

Company & Directors' Information:- V J COMMUNICATION PRIVATE LIMITED [Strike Off] CIN = U64203PB1996PTC017956

Company & Directors' Information:- R J SOFTWARE PRIVATE LIMITED [Active] CIN = U72200DL2005PTC133815

Company & Directors' Information:- H J SOFTWARE PRIVATE LIMITED [Active] CIN = U72200TG2007PTC056351

Company & Directors' Information:- P & G COMMUNICATION PRIVATE LIMITED [Active] CIN = U74140MH2013PTC251505

Company & Directors' Information:- PR SOFTWARE PRIVATE LIMITED [Strike Off] CIN = U72200MH2001PTC130374

Company & Directors' Information:- I & I SOFTWARE INDIA PRIVATE LIMITED [Strike Off] CIN = U72200TN2005PTC056262

Company & Directors' Information:- D F SOFTWARE INDIA PRIVATE LIMITED [Strike Off] CIN = U72200TZ2003PTC010629

Company & Directors' Information:- E. C. SOFTWARE INDIA PRIVATE LIMITED [Active] CIN = U72900TN2007PTC063486

Company & Directors' Information:- Q 3 INDIA SOFTWARE PRIVATE LIMITED [Active] CIN = U72900TN2007PTC065786

Company & Directors' Information:- K Y SOFTWARE PRIVATE LIMITED [Strike Off] CIN = U72200DL2005PTC136072

Company & Directors' Information:- T M I SOFTWARE PRIVATE LIMITED [Strike Off] CIN = U72200KA2005PTC036299

Company & Directors' Information:- B C L SOFTWARE (INDIA) PRIVATE LIMITED [Strike Off] CIN = U30007MH1999PTC117922

Company & Directors' Information:- C C M SOFTWARE PRIVATE LIMITED [Strike Off] CIN = U72200TG2000PTC034002

Company & Directors' Information:- M I S SOFTWARE PRIVATE LIMITED [Active] CIN = U72200TN2008PTC068694

Company & Directors' Information:- P J COMMUNICATION PRIVATE LIMITED [Active] CIN = U72900DL2000PTC105416

Company & Directors' Information:- A. T. SOFTWARE PRIVATE LIMITED [Active] CIN = U72200TG1996PTC023841

Company & Directors' Information:- J A K SOFTWARE PVT LTD [Active] CIN = U72200DL2001PTC111929

Company & Directors' Information:- R R SOFTWARE PVT LTD [Under Process of Striking Off] CIN = U72200KL1991PTC006051

Company & Directors' Information:- A M H SOFTWARE PRIVATE LIMITED [Strike Off] CIN = U72200DL2005PTC132410

Company & Directors' Information:- P D A SOFTWARE PRIVATE LIMITED [Strike Off] CIN = U72900DL2003PTC123465

Company & Directors' Information:- K C SOFTWARE PRIVATE LIMITED [Active] CIN = U74899DL1989PTC036923

Company & Directors' Information:- I SOFTWARE PRIVATE LIMITED [Strike Off] CIN = U72300MH2012PTC225903

Company & Directors' Information:- V M SOFTWARE PRIVATE LIMITED [Strike Off] CIN = U72900PN2010PTC136847

Company & Directors' Information:- M K COMMUNICATION PVT LTD [Strike Off] CIN = U72900HP2006PTC030292

Company & Directors' Information:- H M SOFTWARE PRIVATE LIMITED [Strike Off] CIN = U72200HP2011PTC031756

Company & Directors' Information:- H V COMMUNICATION PRIVATE LIMITED [Active] CIN = U52602DL2009PTC193309

Company & Directors' Information:- S N R SOFTWARE PRIVATE LIMITED [Strike Off] CIN = U72900DL2012PTC243073

Company & Directors' Information:- K A V SOFTWARE PRIVATE LIMITED [Active] CIN = U72200DL2005PTC144121

Company & Directors' Information:- A AND A COMMUNICATION PRIVATE LIMITED [Strike Off] CIN = U92132DL2001PTC110975

Company & Directors' Information:- C M S SOFTWARE PRIVATE LIMITED [Active] CIN = U74899DL2005PTC142352

Company & Directors' Information:- S M I T SOFTWARE COMPANY PRIVATE LIMITED [Strike Off] CIN = U74899DL2006PTC144816

Company & Directors' Information:- B. M. COMMUNICATION PRIVATE LIMITED [Strike Off] CIN = U64100DL2012PTC244419

Company & Directors' Information:- H. K. COMMUNICATION PRIVATE LIMITED [Active] CIN = U64100DL2013PTC255831

Company & Directors' Information:- B R COMMUNICATION PRIVATE LIMITED [Active] CIN = U64203DL2002PTC114477

Company & Directors' Information:- A D SOFTWARE PRIVATE LIMITED [Strike Off] CIN = U72200KA2002PTC030722

Company & Directors' Information:- N S N COMMUNICATION PRIVATE LIMITED [Strike Off] CIN = U64100KA2014PTC073757

Company & Directors' Information:- H. A. N. R. E. J SOFTWARE PRIVATE LIMITED [Strike Off] CIN = U72200TG2008PTC062044

Company & Directors' Information:- N A COMMUNICATION PRIVATE LIMITED [Strike Off] CIN = U74120DL2008PTC182901

Company & Directors' Information:- G & D COMMUNICATION PRIVATE LIMITED [Strike Off] CIN = U64200MP2007PTC019633

    Income Tax Appeal No. 1475 of 2016

    Decided On, 29 January 2019

    At, High Court of Judicature at Bombay

    By, THE HONOURABLE MR. JUSTICE AKIL KURESHI & THE HONOURABLE MR. JUSTICE M.S. SANKLECHA

    For the Appellant: Suresh Kumar, Advocate. For the Respondent: F.V. Irani a/w Atul Jasani, Advocates.



Judgment Text

Akil Kureshi, J.1.This appeal under section 260A of the Income Tax Act, 1961 ("the Act" for short), challenges the order dated 9.12.2015 passed by the Income Tax Appellate Tribunal (...the Tribunal... for short). This appeal relates to the Assessment Year 2007 08.2. Revenue has urged following question of law for our consideration:" Whether on the facts an in the circumstances of the case and in law, the Tribunal has erred in holding that the transaction between the assessee and M/s. The Walt Disney Company (Southeast Asia) Pte Ltd (WDPL) is that of share transfer and not the one of slump sale, without appreciating that the said transaction between the assessee and WDPL squarely meets the criteria of slump sale as laid down in Section 2(42C) of the Income Tax Act and thereby the Capital Gain accrued thereon should be governed by the provisions of section 50B of the Income Tax Act, 1961?3. The respondent assessee is in the business of production of television programs, air time sales, movie production and distribution of films. For the subject assessment year, the respondent filed return of income declaring a loss of Rs. 21.01 crore under normal provisions of the Act and determining book profit at Rs. 19.44 crore under Section 115JB of the Act. In its return of income, the respondent had declared long term capital gains in respect of sale of its 49% shares in one M/s. United Home Entertainment Limited (UHEL) to a third party at Rs. 24.94 crore.4. During the course of assessment proceedings, the Assessing Officer held that the respondent had sold its entire share holding i.e 100% in its subsidiary UHEL to a third party. The Assessing Officer thus concluded in its order dated 30.12.2010 that the sale of its shares in UHEL to a third party, resulted in slum sale of an undertaking. Thus, the capital gains have to be computed as per the provisions of Section 50B of the Act resulting in short term capital gain.5. Being aggrieved, the respondent carried the issue in appeal to the Commissioner of Income Tax (Appeals) ["CIT(A" for short] but without success.6. On further appeal to the Tribunal, the respondent pointed out that factually, the Assessing Officer was incorrect in holding that the respondent was holding 100% shares of UHEL. In fact, the respondent held only 49% shares in UHEL while balance shares of 50% were held by Unilazer Export & Management Consultants Limited and 1% share were held by other shareholders. However, all of them had individually sold their share holdings in UHEL to the third party namely Walt Disney Company Ltd. However, the impugned order of the Tribunal proceeded to consider the issue in the context of the definitions of term "slump sale" under Section 2(42C) of the Act and of "undertaking" as given in Explanation 1 to Section 2 (19AA) of the Act and concluded that the transfer of shares in a company will not result in a transfer of an undertaking or part of the undertaking to make it a slump sale. The impugned order holds that the respondent had only sold its shares in UHEL and that the undertaking of UHEL was not the subject matter of the sale. The impugned order placed reliance on a decisions of the Supreme Court in the case of Bacha F. Guzdar vs. Commissioner of Income Tax 27 ITR 1 and in the case of Vodafone International Holdings vs. Union of India & Anr. 341 ITR 01 to accept the respondent's contention that sale of shares of a company does not tantamount to sale of the assests of the company. It has been observed in Bacha F. Guzdar (supra) that;"The interest of a shareholder either individually or collectively does not amount to more than a right to participate in the profits of the company. The company is a juristic person and is distinct from the shareholders. It is the company which owns the property and not the shareholders."7. The Tribunal held that transfer of shares by the respondent in UHEL was just transfer of shares simplicitor and this transfer of shares cannot be considered to be a slump sale of an undertaking within the provisions of Section 2(42C) of the Act. Thus, making the provisions of Section 50B of the Act inapplicable to the present facts, while allowing the appeal of the respondent.8. We find that the impugned order of the Tribunal has invoked the correct principle of law to draw a distinction between transfer of shares and transfer of undertaking. In the present facts, what has been transferred are mere shares of the respondent in UHEL. There has been no transfer of a

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n undertaking of UHEL. The undertaking continues to be vested in UHEL. Only there has been change in pattern of its share holdings which would not make it slump sale. This position is evident from the statutory definition of slump sale and the term 'undertaking' as defined in the Act read with the binding decision of the Apex Court.9. In the above view, the question as proposed does not give rise to any substantial question of law. Thus, not entertained.10. In the result, the appeal is dismissed.
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