Slump sale of mobile app to wholly owned subsidiary is GST exempt: AAR

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Case Details: Authority for Advance Rulings, Karnataka Capfront Technologies (P.) Ltd., In re – [2023] 148 taxmann.com 84 (AAR-KARNATAKA)

Judiciary and Counsel Details

Dr M.P. Ravi Prasad & T. Kiran Reddy, Member

Bhavesh Jhabak for the Appellant.

Facts of the Case

The applicant developed a mobile application based Fintech product which can be used as a digital platform to facilitate lending of short term personal loans. It was intending to transfer that mobile application to its wholly owned subsidiary. It filed an application of advance ruling to determine taxability on the transfer of mobile application software.

AAR Held

The Authority for Advance Ruling noted that the applicant intended to sell an independent part of its business i.e. Loan Front Mobile Application along with assets & liabilities which would be a fully functional part of the business. There would be a continuity of business since the said part of business shall be functional and it would be transferred as a whole to a new owner. Thus, it would amount to transfer of a going concern and shall be exempted under GST as per Notification No. 12/2017-C.T. (Rate), dated 28-6-2017.

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