Meaning of Slump Sale

Slump sale refers to sale of entire business of an undertaking as a whole for a lumpsum consideration. In case of slump sale, the purchase consideration should be arrived at without assigning individual values to individual assets and individual liabilities.

Note: If the values of assets and liabilities have been determined individually only for the purpose of payment of stamp duty, registration fees or other similar  taxes, such  transaction  would  still  be  covered  under  the  scope  of  'slump sale'.

Computation of Capital Gains

                   Capital gains shall be taxable in the year in which the undertaking has been sold. The amount of capital gains shall be computed as follows:


Amount Rs.

Price at which Undertaking has been sold

Less: Expenses in connection with sale of Undertaking Less: Net-Worth of the Undertaking



Capital Gains (ST/LT)


                   Short-term capital gains would arise if the undertaking was owned by the assessee for a period of 36 months or less.

                   Long-term capital gains would arise if the undertaking was owned by the assessee for a period exceeding 36 months. Benefit of indexation would not be available in such cases.

How to Calculate Net-Worth of the Undertaking

Net Worth = Total Assets (-) Total Liabilities

                   In case of depreciable assets, their WDV shall be taken into consideration whereas for other non-depreciable assets, their book values shall be taken into consideration.

                   Revaluation of assets shall be completely ignored.

      Where the full cost of an asset has been allowed as deduction u/s 35AD, its value shall be taken as NIL at the time of computation of net worth.

      All the liabilities payable shall be taken into consideration.


General Meaning

Full Value of Consideration (FVC) refers to the whole amount received/receivable by the transferor in connection with the transfer of a capital asset. In its general sense, FVC does not have any reference to the market value of the capital asset.

Full Value of Consideration in Special Cases

Relevant Section

Mode of Transfer

Deemed Full Value of Consideration


Money/asset          received                                 from                                 an                                 insurance

company on damage, destruction, etc of a capital asset

Money/FMV of asset received as on the date of receipt


Conversion of capital asset into stock-in-trade

FMV of the capital asset as on the date of



Capital contribution in _kind by a partner or member into Firm/A0P/BOI

Amount recorded in the books of accounts of Firm/AOP/BOI to give effect to such capital



Distribution of capital asset to partner or member on dissolution of Firm/A0P/BOI

FMV of the capital asset as on the date of dissolution


Money/asset received by the shareholders of a company in the event of liquidation of the


[(Money + FMV of asset as on the date of distribution) - (Amount deemed as dividend u/s



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