QTR Ltd sold an undertaking as slump sale which was held by more than 4 years and earned ₹15,00,000 as capital gain including gain from depreciable fixed assets. Income tax department wants to calculate and consider the

Answer 6(a) Computation of Taxable Profits of the Resulting Companies Particulars Capital gain tax payable in case of slump sale is to be divided into - a. Capital Gain arising from transfer of short-term capital assets - Capital Assets being one or more undertakings owned and held by an assessee for not more than thirty-six months immediately preceding the date of its transfer shall be deemed to be the capital gains arising from the transfer of short-term capital assets and b. Capital Gain arising from transfer of long-term capital assets - Capital Assets being one or more undertakings owned and held by an assessee for more than thirty-six months immediately preceding the date of its transfer shall be deemed to be the capital gains arising from the transfer of long-term capital assets. In case of CIT vs. Equinox Solution Pvt. Ltd (Supreme Court) it was held that Section 45/50(2): If an undertaking is sold as a running business with all assets and liabilities for a slump price, no part of the consideration can be attributed to depreciable assets and assessed as a short-term capital gain u/s 50(2). If the undertaking is held for more than three years, it constitutes a "long-term capital asset" and the gains are assessable as a long-term capital gain Hence, action of the department in not valid.