Transfer of Business:

Relief under Section 89A – In Respect of Salary, etc., Paid in Arrears or in Advance

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How to read Notice under section 139(9), 142(1), 148, 153C

Deductions under Section 80C to 80U

 Illustrative example of a slump sale between a holding company and its subsidiary company.


  • ABC Finance Corp., a finance company, has a subsidiary.
  • The subsidiary transfers a certain amount to ABC Finance Corp. under a scheme of arrangement sanctioned by the High Court. This arrangement falls under the provisions of Sections 391 to 394 of the Companies Act, 2013.

Question: Can this scheme of arrangement be treated as a slump sale to attract capital gains provisions?

Understanding Slump Sale:

  • In simple terms, a slump sale involves the transfer of a whole or part of a business concern as a going concern, including all assets and liabilities.
  • It’s like selling the entire business “lock, stock, and barrel” without assigning individual values to assets and liabilities.
  • The term “undertaking” includes any part of a business, a unit, or a division taken as a whole, but not individual assets or liabilities.

Quick Test for Slump Sale:

  1. The business is sold off as a whole and as a going concern.
  2. The sale is for a lump sum consideration.
  3. The materials available do not indicate item-wise value of the assets transferred.

Taxability of Gains Arising on Slump Sale:

  1. Section 50B of the Income-tax Act, 1961 provides the mechanism for computing capital gains arising from a slump sale.
  2. Since slump sale is governed by a special provision, Section 50B overrides other provisions of the Act.
  3. Capital gains arising from the transfer of an undertaking are deemed to be long-term capital gains.

Illustrative Example:

  • ABC Finance Corp. transfers its entire business (including assets and liabilities) to another company.
  • The consideration received for this transfer constitutes a lump sum.
  • Since individual values are not assigned to assets and liabilities, it qualifies as a slump sale.
  • Capital gains arising from this transaction will be computed as per Section 50B.

Remember, this example is for illustrative purposes, and specific cases may vary. Always consult official sources or tax professionals for accurate advice. 📊💼

Important Considerations:


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