Bombay High Court: Upholding the decision of the Income Tax Appellate Tribunal, a division bench comprising of SC Dharamadhikari and GC Kulkarni, JJ held that transfer of a business undertaking as a going concern against bonds and preference shares issued was not a sale, but an exchange. Subsequently, section 2(42C) and section 50B of the Income Tax Act, 1961 relating to the computation of capital gains were not applicable to such a transfer. In the present case, the respondent company had transferred its lift division to another company by way of a slump sale and as consideration for the transfer, preference shares and bonds were allotted by that company to the respondent. The taxpayer claimed that the transfer was an 'exchange' and not a 'sale' and therefore, was not taxable as slump sale. However, this was not accepted by the Tax Officer. The company then appealed to the Tribunal which accepted its contentions. Aggrieved by the decision of the Tribunal, CIT moved the High Court. The Bombay High Court relying on the findings and observations of the Tribunal, also concluded that the entire scheme of arrangement envisaged that the transfer of the lift division was not for any monetary consideration, thus it was a case of exchange and not sale. The Court distinguished the facts of this case with the Delhi High Court ruling of SREI Infrastructure Finance Limited (SIFL) vs. Income Tax Settlement Commission, Writ Petition Civil No. 1592/2012 where the consideration was in terms of money as well as shares, thus the transfer could not be termed as an exchange in that case. [Commissioner of Income Tax vs. Bharat Bijlee Limited, Income Tax Appeal No. 2153 of 2011, decided on May 9, 2014]
In OP(Crl.).No.348 OF 2019, T.K.SAJEEVAN vs FRANCIS T.CHACKO, the appeal was filed against the order of the lower court to deposit 25% of the fine before filling of appeal. The appellant argued that the deposit introduced through the Section 148 of the NI Act after amendment was directory in nature as it used the term 'may' while mentioning the issue of deposit. The Kerala High Court however disagreeing held that in view of the object of the Legislature while incorporating Section 148 into N.I. Act, the word 'may' will have to be read as 'shall'. The imposition of payment contemplated under Section 148 N.I. Act cannot be restricted to some prosecutions and evaded in other prosecutions. Since the amount directed to be deposited being compensation, undoubtedly, it is liable to be ordered to be deposited irrespective of the nature of the prosecution. Therefore, the word 'may' can only be taken to have the colour and meaning of 'shall' and there
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