Relying on the principles of real income theory, Bombay High Court rules that the amount withdrawn from escrow account shall be reduced from sale consideration for computing capital gains and hence not taxable
An individual promoter (‘Assessee’) held 23.59% equity stake in a company. The Assessee sold his stake to a buyer under a Share Subscription and Purchase Agreement (‘SPA’) along with other promoters of the company.
SPA provided that out of the total consideration of INR 155 crores, an amount of INR 30 crores was to be deposited in an escrow account as per the terms of a separate escrow agreement entered between promoters, buyer and the escrow agent.
