Renoll Food and Disposal Ltd. wants to sell one of its Food units (unit first) out of two units on 30th March, 2025, which was set up in June, 2017. Total consideration for sale of Food unit as a going concern by way of

CS Professional · Advanced Direct Tax Laws and Practice · PYQS · December 2025
Renoll Food and Disposal Ltd. wants to sell one of its Food units (unit first) out of two units on 30th March, 2025, which was set up in June, 2017. Total consideration for sale of Food unit as a going concern by way of Slump Sale is ₹47,80,000. The summarized financial position of Food unit as on 30th March. 2025 is as under : Capital and Liabilities Amount (₹) Assets Amount (₹) Paid up capital 18,00,000 Fixed assets 19,00,000 General Reserve 12,20,000 Debtors 15,00,000 Revaluation Reserve 10,50,000 Inventories 13,00,000 Current liabilities 6,30,000 47,00,000 47,00,000 Following additional informations are provided by company as under: Fixed assets include Land purchased at ₹12,50,000 in October, 2020 revalued at ₹15,00,000. For the remaining fixed assets, their written down value as per the Income- tax Act, 1961 is ₹3,50,000. Cost index number for F.Y. 2024-25 is 363: F.Y. 2016-17 is 264: F.Y. 2017-18 is 272; and F.Y. 2020-21 is 301. Compute the Capital Gain arising on sale of Food unit of Renoll Food and Disposal Ltd. for the assessment year 2025-26.

Answer & Explanation:

Computation of Net worth of the Food Unit Particulars Amount (₹) Fixed assets (other than Land) at W.D.V. 3,50,000 Land at cost price (Revaluation Reserve is not to be considered) 12,50,000 Debtors (at Book value) 15,00,000 Inventories (at Book value) 13,00,000 44,00,000 Less Current liabilities (6,30,000) Net worth of the Food Unit 37,70,000 Computation of Long-Term Capital Gain on Slump Sale of Renoll Food and Disposal Ltd. for A.Y. 2025-26 Amount (₹) Full Value of Consideration (FVC) 47,80,000 Less: Expenditure on Transfer Nil Therefore, Net Sale Consideration 47,80,000 Less: Cost of Acquisition and Cost of Improvement (Being Net Worth of the Undertaking transferred) (37,70,000) Long Term Capital Gains 10,10,000 Note: Since the Unit transferred is in existence for more than 36 months, the resultant capital gains is Long Term Capital Gains. Benefit of indexation is not available in case of Slump Sale.

Topics: Capital Gains

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