CS Executive · Tax Laws and Practice · Capital Gains
In a slump sale of a division by Bharat Engineering Ltd, the books show the following assets: land and stock at book value Rs 40 lakh, depreciable assets with a block written down value of Rs 25 lakh (the books show Rs 30 lakh after a revaluation), and liabilities of Rs 15 lakh. Under the Income-tax Act, 2025, what is the net worth taken as the cost of acquisition?
Net worth is Rs 50 lakh. Depreciable assets are taken at the block's written down value of Rs 25 lakh, ignoring revaluation, and other assets at book value of Rs 40 lakh. The total of Rs 65 lakh is reduced by liabilities of Rs 15 lakh.
- ARs 50 lakhCorrect
- BRs 55 lakh
- CRs 65 lakh
- DRs 70 lakh
Explanation
Depreciable assets are taken at the written down value of the block (Rs 25 lakh), ignoring revaluation. Other assets are at book value (Rs 40 lakh). Total assets are 40 + 25 = Rs 65 lakh, less liabilities of Rs 15 lakh, giving Rs 50 lakh. Rs 55 lakh wrongly uses the revalued figure of Rs 30 lakh, Rs 65 lakh ignores liabilities, and Rs 70 lakh does both.
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