Capital gain on sale of assets acquired in a slump sale.

Tax planning 763 views 1 replies

Dear All,

A Company acquired certain assets (mainly old plant and machinery) along with a long term lease of land by paying a single consideration. Thereafter the company dismantled and sold the old plant and machinery and there by the block ceased to exist. Meanwhile the company acquired few items of small machinery which are of entirely different nature.

Is the Company liable to pay tax due to Capital Gain?

If yes, then what will be the cost of acquisition of this old plant and machinery purchased along with the lease of land under a single consideration.


Thanks & Regards.

Replies (1)

The company shall be liable to capital gain tax. The value of plant and machinery has to be seprated from the total consideration paid for the plant and machinery and land. the value has to be deducted from opening value + additions during the year and charged to short term capital gain tax....

Since the company aquired certains items which are entirely different but are in the nature of plant and machinery and applicable to same rate of tax as the previous block then the purchase price has to be included in the additions during the year

Regards,

Ronak Agrwal


CCI Pro

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