25/02/2019

COMPUTATION OF CAPITAL GAIN IN CASE OF SLUMP SALE (SEC. 50B) ( Author - Admin )


Special provision for computation ofcapitalgains in the case of slump sale [Sec. 50B] :- Provisions of section 50B, applicable for computation of capital gains in the case of slump sale, are given below :-


1. Any profits or gains arising from the slump sale effected in the previous year shall be chargeable as long term capital gains and shall be deemed to be the income of the previous year in which the transfer took place. 

Where, however, any capital asset being one or more undertakings owned and held by the assessee for not more than 36 months is transferred under the slump sale, then capital gain shall be deemed to be short-term capital gain. 

2. In the case of slump sale of the capital asset being one or more undertaking, the “net worth" of the undertaking shall be taken as cost of acquisition and cost of improvement. "Net worth" for this purpose is 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 the books of account. Any change in the value of assets on account of revaluation of assets shall be ignored for the purpose of computing the net worth. The aggregate value of total assets of such undertaking or division shall be the written down value of block of assets determined in accordance with the provisions contained in sub-item (C) of section 43(6)(c)(1) in the case of depreciablc assets, nil in the case of capital assets in respect of which the whole of the expenditure has been allowed or is allowable as a deduction under section 35AD and the book value for all other assets. 

3. The benefit of indexation will not be available. 

4. Every assessee, in the case of slump sale, shall furnish along with the return of income, a report of a chartered accountant in Form No. 3CEA indicating the computation of the net worth of the undertaking or division, as the case may be, and certifying that the net worth of the undertaking or division, as the case may be, has been correctly arrived at.

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