Taxation of Gain on ‘Slump Sale’ for Computing Capital Gain

The term ‘slump sale’ has been defined u/s 2(42C) and it means “transfer of one or more undertakings as a result of the sale for a lump sum consideration without values being assigned to the individual assets.”

If values are assigned to some assets only for the purpose of stamp duty and registration, it shall not be regarded as assignment of values to each asset.

In simple words ‘slump sale’ means sale of running concern for a lump sum consideration.

For computing capital gains in case of ‘slump sale’ the term W.D.V. has been defined under section 43(1)(6)(c)(i)(C). The W.D.V. of any block of assets shall be decreased by the amount of actual cost as reduced by the amount of depreciation actually allowed.

Profit/Loss on ‘slump sale’ [Section 50B]

1.         Any profits and gains arising from ‘slump sale’ effected in the previous year shall be chargeable to tax as capital gains and shall be deemed as income of the previous year in which transfer takes place. In case asset was held for a period not exceeding 36 months it shall be a short term capital asset and if held for a period exceeding 36 months it shall be long term capital asset.

2.         “Net worth” shall be the aggregate value of total assets of the undertaking or division as reduced by the value of liabilities of such undertaking or division as appearing in its books of accounts but any change in the value of assets on account of revaluation of assets shall be ignored for the purposes of computing the net worth.

For computing the net worth, the aggregate value of total assets shall be :

(a)        in the case of depreciable assets, the written down value of the block of assets determined in accordance with the provisions contained in sub-item (C) of item (1) sub-clause (c) of clause (6) of section 43

(b)        in the case of capital assets in respect of which the whole. of the expenditure has been allowed or is allowable as a deduction u/s 35 AD—the value will be nil. [w.e.f. 1-4-20101; and

(c)        in the case of other assets, the book value of such assets.

3.         Every assessee having ‘slump sale’ shall furnish a report along with its return of income, from a Chartered Accountant certifying that the net worth has been correctly calculated.


More Topics ... @ ' Capital Gain's

Capital Gain , Capital Assets & Property for Computing Capital Gain
Types of Capital Assets for Computing ‘Capital Gain’
Types of Capital Gains for Computing ‘Capital Gain’
Computation Of ‘Period Of Holding
 Transfer Of A Capital Asset [Section-2(47)]
Transactions Not regarded as ‘Transfer’ [Section-47]
Capital Gain is Deemed to be the Income of the Previous Year
Amount Received from insurer [Section-45(1A)] for Computing Capital Gain
Transfer of Capital Assets by a person to firm, AOP or Body Of Individuals (BOI) [Section 45(3)] for Computing Capital Gain
 Enhancement of Compensation on Compulsory Acquisition of Assets [Section-45(5)] for Computing Capital Gain
Sale of units Purchased for Deduction U/s 80 CCB [Section-45(6)]
Distribution of Assets by A Company in Liquidation for Computing Capital Gain
Capital Gain on Purchase by A Company of its Own Shares or Other  Securities [Section 46A]
Method of Computing Capital Gain [Section 48]
Expenses Disallowed u/s Section 48 for Computing Capital Gain
Cases in which the Indexation of Cost is not to be done while Calculating long Term Capital Gain
 Computation of Capital Gain in Case of Non-Residents [Sec. 48 Proviso 1 ]
Determination of Cost of Acquisition for Computing Capital Gain.
Taxation of Gain on ‘Slump Sale’ for Computing Capital Gain

Special Provision for full Value of Consideration in certain cases (Section 50C] for Computing Capital Gain
Treatment of Advance Money Received and Forfeited (Section-51] for Computing Capital Gain
Cost of Acquisition of Goodwill [Section-55(2)(a)] for Computing Capital Gain
Cost of Acquisition of Shares [Section 55 (2) (v)] for Computing   Capital Gain
Capital Gains Exempted u/s 10
Capital Gains—Exempted u/s 54
 Capital Gain on Transfer of Self-Cultivated Agricultural Land in Urban   Areas [ Section 54 B]
Capital Gains on Compulsory Acquisition Of Land And Buildings [Section 54D]
 Capital Gain on Transfer of any Long Term Capital Asset [Section-54EC]
Exemption of Capital Gain on Transfer Of Long-Term Capital Assets in case of Investment In Residential House [Section 54F]
Capital Gain on Shifting of Industrial Undertaking from Urban Areas to Non-Urban Areas [Section 54G]
 Exemption of Capital Gain on transfer of assets in case of shifting of Industrial Undertaking from an urban area to any Special Economic Zone (SEZ) [Sec. 54GA]
Long term Capital Gain on Transfer of Residential Property if Net Consideration is Invested in the Equity Shares of an Eligible company [Section 54GB] [w.e.f. A.Y. 2013- 14 but upto A.Y. 201 7-1 8]
Reference to Valuation Officer [Section 55] towards Capital Gain

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