Nilesh Shah writes:
Cell: 92246-59941
E mail: nilesh63@vsnl.com
Slump sale is defined in sec 2(42C) of the Act.
It means the transfer of one or more undertaking as a result of the
sale for a lump sum consideration without values being assigned to
the individual assets & liabilities in such sales.
Expl 1 For the purpose of this clause "undertaking" shall have the
meaning assigned to it in Explanation 1 to clause (19AA).
Exp 2.For the removal of doubts,it is hereby declared that the
determination of the value of an asset or liability for the sole
purpose of payment of stamp duty, registration fees or other similar
taxes or fees shall not be regarded as assignment of values to
individual assets or liabilities.
A sale, in order to constitute a slump sale must satisfy the
following tests (1) the business has been sold as a whole & as a
going concern at its realizable value;(2) the seller has not
withdrawn any asset (both movable & immovable ) or liability from
the business sold or the purchaser has not rejected any asset or
liability comprised in the business; (3) the materials available on
record do not indicate item-wise value of the assets transferred; (4)
the business or the undertaking should have a seperate existence
either in the books of account or in terms of it independent
existence for e.g Baroda works or Ahmedabad works or say a switch gear unit or a cable unit. The business
or the undertaking should be recognised as an independent cost or
profit centre in the books of the assessee.
Unless & until the aforesaid conditions are fulfilled it will not
constitute slump sale. A sale of various items put together will not
in itself constitute slump sale.
Your's Sincerely,
Nilesh Shah
CAclubindia
