As per section 2(42C) of the Income Tax Act 1961, slump sale means the transfer of one or more undertaking, by any means, for a lump sum consideration without values being assigned to individual assets and liabilities in such transfer.
Undertaking shall include any part of an undertaking, or a 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 thereof not constituting a business activity.
If the undertaking is held for more than 36 months immediately preceding the date of transfer, then the capital gains arising shall be long term in nature. This is irrespective of the fact that the undertaking consisted of some individual assets which were short term capital assets.
Cost of acquisition and cost of improvement for the purpose of computing capital gains as per section 48 shall be the Net Worth of the undertaking.
Net Worth = WDV of Depreciable Assets + Book Value of Non-depreciable assets - Book Value of Liabilities.
Revaluation of asset shall be ignored while computing book value.
The Fair Market Value (FMV) of the capital assets as on the date of transfer calculated as per Rule 11UAE of the Income Tax Rules, 1962 shall be deemed to be the full value of consideration (FVOC) for the purpose of computing capital gains.
Benefit of indexation shall not be available.
In case of transfer of capital asset being goodwill of a business or profession which is self generated, the cost shall be taken as NIL.
In case of capital asset for which whole of the deduction has been allowed u/s 35AD, the cost shall be taken as NIL.
Every assessee shall furnish a report of CA in the prescribed form on or before the due date referred to in section 44AB certifying the computation of net worth in accordance of the provisions of the Act.
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