Treatment of capital gains
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
30 November 2011
Hi freindsss
Plz TELL me.
company is under liquidation and no details are available on the Cost of Acquisition and WDV.so how to calculate capital gains ??
Thanks
Aadish Jain
Plz TELL me.
company is under liquidation and no details are available on the Cost of Acquisition and WDV.so how to calculate capital gains ??
Thanks
Aadish Jain
03 December 2011
If really there exists a company like this,
it should get liquidated even before.
.
You need not to worry in this matter, liquidators will avail the details and needful may be done by them.
it should get liquidated even before.
.
You need not to worry in this matter, liquidators will avail the details and needful may be done by them.
Querist : Anonymous
Querist :
Anonymous
(Querist)
05 December 2011
Thanks Sir
But Liquidators have no Information on Cost of Various Assets and W.D.V.
And we have to calculate Capital Gains,
So we are facing problem.
Please reply as soon as possible.
AADISH JAIN
But Liquidators have no Information on Cost of Various Assets and W.D.V.
And we have to calculate Capital Gains,
So we are facing problem.
Please reply as soon as possible.
AADISH JAIN
02 August 2025
Hi Aadish,
In the case of a company under liquidation where **cost of acquisition** and **written down value (WDV)** of assets are not available, here’s the approach to calculate **capital gains**:
---
### 1. **Cost of Acquisition when Records are Not Available**
* **Rule 8 of Income Tax Rules, 1962** provides a mechanism for such cases.
* If **cost of acquisition is unknown**, the **cost will be taken as the fair market value (FMV) of the asset on 1st April 1981** (for assets acquired before this date) or the **actual purchase price** if acquired after 1.4.1981.
* When FMV on 1.4.1981 is not available, you can get the value estimated by a **registered valuer** or use **valuation reports** (like stamp duty value, circle rates, etc.).
---
### 2. **WDV Not Available (For Depreciable Assets)**
* If WDV is not available (for plant, machinery, building etc. under block of assets), then:
* The liquidator may get **valuation of the assets by a registered valuer**.
* For tax purposes, depreciation and capital gains can be computed based on **value determined by valuer**.
---
### 3. **Capital Gains Calculation**
* **Capital Gains = Sale Consideration – Cost of Acquisition (or FMV as above) – Expenses incurred on transfer (if any).**
* If the asset was acquired before 1.4.1981 and records are missing, take FMV as cost.
* Use the valuation reports to establish reasonable values.
* Document the basis of valuation thoroughly since the department may question it.
---
### 4. **Additional Points**
* Liquidator should maintain **all correspondence, valuation reports,** and **other supporting evidence** to defend cost values.
* If valuation cannot be done properly, the income tax department may estimate or reject claims — so proper documentation is critical.
* You may also consider **taking legal/tax expert assistance** or applying to **Income Tax Authorities for determination**.
---
**Summary:**
| Scenario | Treatment |
| ---------------------------------- | ---------------------------------------------- |
| Cost of acquisition unknown | Take FMV as on 1-4-1981 or get valuation |
| WDV unknown for depreciable assets | Get valuation by registered valuer |
| Capital gains computation | Sale price – cost (or FMV) – transfer expenses |
---
If you want, I can help you draft a letter or prepare a valuation request template for the valuer or tax authority.
Would you like me to assist with that?
In the case of a company under liquidation where **cost of acquisition** and **written down value (WDV)** of assets are not available, here’s the approach to calculate **capital gains**:
---
### 1. **Cost of Acquisition when Records are Not Available**
* **Rule 8 of Income Tax Rules, 1962** provides a mechanism for such cases.
* If **cost of acquisition is unknown**, the **cost will be taken as the fair market value (FMV) of the asset on 1st April 1981** (for assets acquired before this date) or the **actual purchase price** if acquired after 1.4.1981.
* When FMV on 1.4.1981 is not available, you can get the value estimated by a **registered valuer** or use **valuation reports** (like stamp duty value, circle rates, etc.).
---
### 2. **WDV Not Available (For Depreciable Assets)**
* If WDV is not available (for plant, machinery, building etc. under block of assets), then:
* The liquidator may get **valuation of the assets by a registered valuer**.
* For tax purposes, depreciation and capital gains can be computed based on **value determined by valuer**.
---
### 3. **Capital Gains Calculation**
* **Capital Gains = Sale Consideration – Cost of Acquisition (or FMV as above) – Expenses incurred on transfer (if any).**
* If the asset was acquired before 1.4.1981 and records are missing, take FMV as cost.
* Use the valuation reports to establish reasonable values.
* Document the basis of valuation thoroughly since the department may question it.
---
### 4. **Additional Points**
* Liquidator should maintain **all correspondence, valuation reports,** and **other supporting evidence** to defend cost values.
* If valuation cannot be done properly, the income tax department may estimate or reject claims — so proper documentation is critical.
* You may also consider **taking legal/tax expert assistance** or applying to **Income Tax Authorities for determination**.
---
**Summary:**
| Scenario | Treatment |
| ---------------------------------- | ---------------------------------------------- |
| Cost of acquisition unknown | Take FMV as on 1-4-1981 or get valuation |
| WDV unknown for depreciable assets | Get valuation by registered valuer |
| Capital gains computation | Sale price – cost (or FMV) – transfer expenses |
---
If you want, I can help you draft a letter or prepare a valuation request template for the valuer or tax authority.
Would you like me to assist with that?
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