Discuss the tax aspects on: (i) Slump Sale

(i) Tax Aspects on Slump Sale As per section 2(42C) of Income-tax Act, 1961 , slump sale is defined as transfer of one or more undertakings (on a going concern basis or during winding-up) as a result of sale for a lump-sum consideration without values being assigned to individual assets and liabilities. As per section 50B (1) of the Income Tax Act, 1961 :- any profits or gains arising from the slump sale effected in the previous year shall be chargeable to income-tax as capital gains from the transfer of long-term capital asset and shall be deemed to be the income of the previous year in which the transfer took place: Provided that any profits or gains arising from the transfer under the slump sale of any capital asset being one or more undertakings owned and held by an assesee for not more than thirty-six months immediately preceding the date of transfer shall be deemed to be the capital gains arising from the transfer of short-term capital assets. However, even in case of long-term capital asset, no indexation benefit is available for slump sale transaction, which increases the tax liability. Capital gains arising on slump sale are calculated as the difference between sale consideration and the net worth of the undertaking.