in a profession - if assessee purchased goodwill (Rs 500000) and later he sold his profession and goodwill sold for rs 800000 then what will cost of acquisition and capital gain ?
in a profession - if assessee purchased goodwill (Rs 500000) and later he sold his profession and goodwill sold for rs 800000 then what will cost of acquisition and capital gain ?
As here goodwill is purchase and not generated one, i think all the normal capital gain on an asset will be followed...
For the purposes of sections 48 and 49, "cost of acquisition", - (a) In relation to a capital asset, being goodwill of a business, or a right to manufacture, produce or process any article or thing, tenancy rights, stage carriage permits or loom hours,
- (i) In the case of acquisition of such asset by the assessee by purchase from a previous owner, means the amount of the purchase price;
and (ii) In any other case [not being a case falling under sub-clauses (i) to (iv) of sub-section (1) of section 49], shall be taken to be nil.
regards,
ratan
Dear Vikash,
Agree with above answers.. the cost wil be the purchase price...
The capital gain should be computed normally...
Also since you have highlighted the word profession,
U should see that the cost of goodwill (other than purchased goodwill) of a business is deemed NIL, as per sec 55
but goodwill of a profession is excluded, and so the CG taxing mechanism would fail..
Vikash, Goodwill of profession is Exempt from Cap Gain.
Wonder how goodwill of a profession could ever be valued.
regards
Piyush
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