| Question And Answer | |
|---|---|
| Subject: | (Capital gain on Slump sale) |
| Category: | i, Income-Tax |
| Querist: | swetha |
| Answered by: | Mr . H. N. Motiwalla |
| Tags: | Capital Gains, slump sale |
| Date: | October 14, 2024 |
Mr. A is a proprietor of various business having different trade name and place of business but the nature of business is same. Can he transfer the business to M/s. A Ltd company after retaining immovable property in his name so no capital gain tax is payable. Is it necessary to transfer it’s entire business with all assets and liabilities to the A Ltd company?
If A wants to transfer its business without transfer of its immovable property, then, he should withdraw immovable property from his business by debiting to his capital account. Thereafter, he can transfer his business with all remaining assets and liabilities as slum sale.
Section 50B of the Act, provides for computation of capital gains in case of slum sale.
Section 2(42(C)) defines “slump sale” which means the transfer of one or more undertaking by any means for a lump sum consideration without values being assigned to the individual assets and liabilities’ to such transfer,
Explanation to the said section provides that for the purposes of this clause “undertaking” shall have the meaning assigned to it in Explanation 1 to clause (19AA), of section 2
As per the Explanation to said clause “undertaking” shall include any part of an undertaking or unit or division of an undertaking or a business activity taken as a whole, but does not include individual assets or liabilities or any combination therefore not constituting a business activity.