Rule 11UAE - Computation of FMV of Capital Asset for slump sale

• Rule 11UAE of the Income Tax Rules, 1962 prescribes provisions regarding computation of Fair Market Value (FMV) of capital asset transferred in slump sale.

• The FMV of capital asset shall be the higher of FMV1 and FMV2 which is calculated as under:

• FMV1 = A+B+C+D-L

• where, A = Book value of all assets except jewellery, artistic work, shares, securities and immovable property as appearing in the books of accounts of the undertaking/division.

• B = Price at which jewellery and artistic work can be sold in open market (as per Rule 11UA)

• C = FMV of shares and securities as per Rule 11UA.

• D = SDV of the immovable property

• L = Book value of liabilities as appearing in the books of accounts of the undertaking/division but excluding the following:

• Paid up equity share capital

• Undeclared dividend

• Reserves and surplus other than provision for depreciation.

• Provision for tax

• Provision for unascertained liabilities.

• Contingent liabilities other than arrears of dividend payable in respect of cumulative preference shares.

• FMV2 = E+F+G+H

• where E = Monetary consideration received on transfer of undertaking

• F = FMV of non-monetary consideration received.

• G = Open market value of non-monetary consideration received on transfer of property other than immovable property.

• H = SDV of non-monetary consideration represented by immovable property.

• For the purpose of determining FMV1 and FMV2, the valuation date shall be slump sale date.