INCOME TAX ACT, 1961

Section 50B

Capital gains - Slump sale - Computation - Allowability of expenditure incurred for transfer

Assessee sold 12 hospitals under slump sale vide business transfer agreement to Fortis Hospitals Ltd. and claimed expenditure of Rs. 18 crores. AO disallowed the claim of expenditure stating that section 50B itself was a separate code and no further deduction was required to be made.Held: Section 50B is a code for itself only for determination of cost of acquisition and cost of improvement of the undertaking but not for the computation of capital gains in case of slump sale. Section 50B only provides for computation of net worth which is deemed to be cost of improvement and cost of acquisition and same cannot be equated with capital gains. For computation of capital gains, recourse has to be made to section 48 as per which capital gains would be computed by taking into account the full value of consideration reduced by cost of improvement and cost of acquisition and also expenditure incurred for transfer. Accordingly, for computation of capital gains, all the components of section 48 had to be considered and disallowance made by AO of expenditure incurred for the purpose of transfer was not justified.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

INCOME TAX ACT, 1961

Section 14A

SUBSCRIBE FOR FULL CONTENT