I. P. Mukerji, J. - (1.) On 18th March, 2019 this appeal under Section 260A of the Income Tax Act, 1961 was admitted, to be heard on the following substantial questions of law:- (i) Whether in the assessment year 1993-94 the transfer of the assessee of its fertilizer unit and fibre unit was a slump sale?(ii) If the answer to question No.(i) is in the affirmative, whether such sale was not assessable to capital gains under the Income Tax Act, 1961?
(2.) A short point of some legal importance is involved in this appeal. This sub-section of the said Act defines slump sale and is set out below:- "2.(42C). "slump sale" means the transfer of one or more undertakings as a result of the sale for a lump sum consideration without values being assigned to the individual assets and liabilities in such sales."Explanation 1.- For the purposes of this clause, "undertaking" shall have the meaning assigned to it in Explanation 1 to clause (19AA).Explanation 2.- For the removal of doubts, it is hereby declared that the determination of the value of an asset or liability for the sole purpose of payment of stamp duty, registration fees or other similar taxes or fees shall not be regarded as assignment of values to individual assets or liabilities."
(3.) In understanding the sub-section one has to read the explanation which says that an "undertaking" shall have the same effect assigned to it in Explanation 1 of clause 19AA (of Section 2). Explanation 1 is as under:-"Explanation 1.- For the purposes of this clause, "undertaking" shall include any part of an undertaking, or a unit or division of an undertaking or a business activity taken as a whole, but does not include individual assets or liabilities or any combination thereof not constituting a business activity.";