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Home Acts & Rules Bill Bills FINANCE (No. 2) BILL, 2009 Chapters List Chapter III DIRECT TAXES This

Clause 24 - Amendment of section 50B - FINANCE (No. 2) BILL, 2009

FINANCE (No. 2) BILL, 2009
Chapter III
DIRECT TAXES
  • Contents

Amendment of section 50B.

24. In section 50B of the Income-tax Act, in Explanation 2, for clause (b), the following clauses shall be substituted with effect from the 1st day of April, 2010, namely:—

"(b) in the case of capital assets in respect of which the whole of the expenditure has been allowed or is allowable as a deduction under section 35AD, nil; and

(c) in the case of other assets, the book value of such assets.".

 



 

Notes on Clauses:

Clause 24 of the Bill seeks to amend section 50B of the Incometax Act relating to special provision for cost of computation of capital gains in case of slump sale.

Under the existing provisions any profits or gains arising from the slump sale effected in the previous year shall be chargeable to income-tax as capital gains arising from the transfer of long-term capital assets and shall be deemed to be income of the previous year in which the transfer took place, further, in relation to capital assets being an undertaking or division transferred by way of such sale, the "net worth" of such undertaking or division shall be deemed to be the cost of acquisition and the cost of improvement for the purposes of sections 48 and 49 and no regard shall be given to the provisions contained in the second proviso to section 48. For the purposes of this section"net worth" has been defined to be the aggregate value of the total assets of the undertaking or division as reduced by the value of liabilities of such undertaking or division as appearing in its books of account.

It is proposed to substitute clause (b) of Explanation 2 of the said section to provide that for computing the net worth, the aggregate value of total assets shall be, (a) in the case of depreciable assets, the written down value of the block of assets determined in accordance with the provisions contained in subitem (c) of item (i) of sub-clause (c) of clause (6) of section 43; (b) in the case of capital assets in repsect of which the whole of the expenditure has been allowed or is allowable as a deduction under section 35AD (relating to deduction in respect of expenditure on specified business and proposed to be inserted as a new section in the Income-tax Act, 1961), nil, and (c) in the case of other assets, the book value of such assets.

This amendment will take effect from the 1st April, 2010 and will, accordingly, apply in relation to the assessment year 2010-2011 and subsequent years. The proposed amendment is consequential in nature.

 
 
 
 

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