Hello all.
I have a confusion/problem in Capital Gains, which I would like to ask from you people. So, here it is:
(1) Slump Sale: A company was having two divisions, namely A and B. Company sells B as a slump sale, on that date it was having
Land - 20 lakhs
P & M - 17 lakhs
Debtors and other current assets - 11 lakhs
current Liabilities - 8 lakhs
Revaluation Reserve (Revaluation of Land)- 6 lakhs
Book value of P & M on that date of division A was 11 lakhs. Value for income tax purposes of whloe P & M block was 20 lakhs and of P & M of B division was 13,81,781.00.
Now, the company also sells plant Q belonging to A division in the same year, but after slump sale for 11 lakhs.
Now, my confusion is that why we will take value of P & M of B as 9 lakhs for calculating net worth of B divsion, and not 13,81,781.00???????
I know that sal value can't exceed block value, but then we can reduce this amount on P & M of A also, why on B.
Please clarify this confusion.
Thanks.
CAclubindia
