Slump Sale Under Section 50B Shields Bhiwandi Land from Double Capital Gains Taxation – ITAT Mumbai
Overview of the Dispute
The Income Tax Appellate Tribunal, Mumbai, recently delivered a significant ruling in the case of Crescent Steels Vs Assessment Unit Income Tax Department, concerning Assessment Year 2016-17. The central question before the Tribunal was whether capital gains tax could be levied again on a piece of immovable property that had already formed part of a slump sale transaction taxed in an earlier assessment year. The Tribunal, after detailed examination of facts, documentary evidence, and applicable legal provisions, ruled decisively in favour of the assessee.
The appeal arose from a reassessment order passed under Section 147 read with Section 144B of the Income-tax Act, 1961, which was subsequently upheld — though with partial modification — by the National Faceless Appeal Centre (NFAC) vide its order dated 17.10.2025. Dissatisfied, the assessee approached the ITAT Mumbai, which passed its order on 10th June 2026.
Background and Factual Matrix
The Assessee and Its Business Structure
The assessee, M/s. Crescent Steels (Old), is a partnership firm comprising five partners. Sometime prior to the relevant period, the partners collectively resolved to transfer the entire business undertaking as a going concern to a newly constituted partnership firm, M/s. Crescent Steels (New), which was formed on 18 April 2012 and consisted of three partners — some of whom were also partners in the old firm.
The Slump Sale Agreement of 2012
On 14.07.2012, the assessee executed a formal slump sale agreement transferring its entire business undertaking — inclusive of all assets and liabilities — to M/s. Crescent Steels (New) for a lump-sum consideration of Rs. 4.15 crore. The agreement expressly covered the land situated at Bhiwandi, bearing Survey No. 16, Hissa No. 2/B, admeasuring approximately 0-51-3 (H-R-P), as one of the assets specifically listed in Annexure 1 to the agreement. Possession of all assets, including the Bhiwandi land, was handed over simultaneously.
The value attributed to the Bhiwandi land within the slump sale consideration was Rs. 12,26,050/-, as reflected in the relevant documents. The entire slump sale gain was computed under Section 50B of the Income-tax Act, 1961, offered to tax, and reflected in the return of income for Assessment Year 2013-14. The return for AY 2013-14 was accepted without scrutiny assessment.
The Registered Conveyance Deed of 2015
Due to technical reasons, the slump sale agreement could not be registered before the Joint Sub-Registrar at Bhiwandi at the time of execution. Subsequently, at the request of the purchaser's partners, a registered sale deed for the Bhiwandi land was executed on 20.10.2015, adopting the then-prevailing market value of Rs. 58,20,500/- as the stamp duty valuation. This deed fell within Assessment Year 2016-17.
Initiation of Reassessment Proceedings
The Assessing Officer, upon receiving information that the assessee had sold immovable property during AY 2016-17 for Rs. 58,20,500/- without offering it to tax, initiated reassessment proceedings under Section 147. After examining the documents submitted in response to the notice issued under Section 148, the Assessing Officer rejected the assessee's contention that the Bhiwandi land had already been transferred via the slump sale, and proceeded to treat the entire stamp duty value of Rs. 58,20,500/- as taxable long-term capital gain in AY 2016-17.
Proceedings Before the Commissioner (Appeals)
The NFAC, acting as the Commissioner (Appeals), partially upheld the Assessing Officer's addition. While it directed that the benefit of cost of acquisition — based on the purchase deed dated 25 November 2008 — be allowed in computing capital gains, the addition itself was confirmed. The NFAC's key findings were: