capital Gains

Slump Sale Means Sale all Assets of Business. in a specifiesd amt contract.

Calculate By

all assets - all liabilities

slump sale means u have given a contract to transfer ur business to say 200 cr.

and can't recognise the value of asset separately......

& for furthur clarification.refer notes u may found at caclubindia search facility

Meaning of Slump Sale

Section 50-B of the Income-Tax Act, 1961, is a special provision for computing capital gains chargeable to tax in the case of a slump sale. Such capital gains are deemed to be long term where the undertaking has been owned and held by the assessee for more than three years, irrespective of the period for which each individual asset of the undertaking has been held.

Therefore, Section 50-B would prevail over the general provisions of the law. Sections 48 and 49 have been made applicable, subject to some modification, for computing capital gains in the case of a slump sale.

Defining ‘net worth’

The net worth of the undertaking transferred is deemed to be the cost of acquisition and cost of improvement for calculating the capital gains. The net worth is to be computed in accordance with Explanations 1 and 2 of Section 50-B.

As per Explanation 1, “net worth” has been defined as the aggregate value of total assets of the undertaking as reduced by the value of liabilities of such undertaking as appearing in the books of account.

Explanation 2 provides that the value of depreciable assets shall be taken as the written-down value (WDV) determined under Section 43(6)(c) of the Act, while the value of non-depreciable assets will be taken as per the books. The net worth so computed is to be certified by the report of the accountant as defined in Section 288(2).

The word “worth” as per the dictionary meaning means value of goods or asset or property.

regards,

ratan