India Tax Weekly - March 9, 2012

Dy. Commissioner of Income-tax vs Summit Securities Limited – Mumbai Tax Tribunal

During the relevant tax year, taxpayer received a sale consideration of INR 1.43 billion on transfer of its power transmission business (PTB), as a going concern (as slump sale), to KEC International Limited (KEC). Section 48 of the IT Act provides that capital gains are computed by deducting the (a) cost of acquisition and (b) expenditure incurred wholly and exclusively in connection with such transfer from the 'full value of consideration' received or accruing as a result of transfer of such capital asset. Section 50B of the IT Act provides that 'net worth' of the undertaking will be deemed to be the cost of acquisition and the cost of improvement for the purposes of computing capital gains. IT Act further provides that 'net worth' will be the aggregate value of total assets of the undertaking as reduced by the value of liabilities of such undertaking as appearing in its books of