A slump sale is a form of transfer of the company as a “going concern” with commitments, that is, on a “as we will see” basis. As part of this restructuring, companies generally sell their unprofitable activities and the business as a whole is sold along with all assets and liabilities related to that business. In the event that a contract is concluded for the purpose of not serving as an immediate transfer of the sale of immovable property, this instrument is considered to be a sales agreement and not a transfer for the purpose of calculating the impact on stamp duty. The transfer of a pursued undertaking` may be classified, in a simple way, as a transfer of a current undertaking which may be carried on by the purchaser as an independent undertaking. His Majesty`s Revenue & Customs (HRMC)`s internationally recognized guidelines for the treatment of business transfers as a permanent business are also underestimated- This decision is also implicitly approved by the Supreme Court in CIT v. City Mills Distributors (P) Ltd (48 ITR 200) (“City Mills Case”). In Dalmia Cement Limited vs. CIT (237 ITR 617) (“Dalmia Cements Case”), the Supreme Court established the principle of the primacy of ownership of income in favour of the purchaser of the business. The facts of that case provided for a transaction in which the date fixed for the transfer was a date before the date of obtaining the administrative authorisations necessary for the conclusion of the transaction, and the revenue had to be incurred in the hands of the transferee, even without administrative authorisation. In reviewing the business transfer agreement, the Advance Ruling Authority found that “the sale of movable property is governed by the Sale of Goods Act 1930 and the applicable law is that the transfer of movable property may be made by the sale by delivery of the goods from the seller to the buyer.
This process changes the ownership of the goods from one person to another. After the Transfer of Property Act 1882, Section 54 dealt with the transfer of real estate by sale. It provides that if the value of real estate is greater than Rule 100, it cannot be transferred unless the deed of sale is registered in accordance with the provisions of the Indian Registration Act. However, it is important to note that real estate with a value below the value of Rule 100 can be transferred by simple delivery of the property. It does not lay down any conditions on the transfer of movable property. Consequently, the law appears to have distinguished between, on the one hand, the transfer of immovable property with a value of more than 100 and, on the other hand, the transfer of immovable property with a value of less than 100. In the first case, legal ownership is not transferred, unless the deed of sale is registered, while in the later case no formality is required other than delivery of the good. “Commercial ownership can be transferred in different ways. A direct sale is an immediate transfer of ownership. This gives the seller a clean exit and the money for the company`s asset in advance. A gradual sale is a more flexible option, which finances the buyer`s payments.
According to Business.gov, this is often beneficial for both parties, since the seller receives income from the gradual sale and the buyer does not need to make a direct purchase.. . .