capital gain on land

We are a company engaged in manufacturing process, we are going to sell our Leasehold Land and Building alongwith the machines (except the Stocks, Current assets and liabilities).

As i know we can bifurcate the Total Sales Value in 1. Land , 2. Building and 3. Machineries. Now we want the clarification regarding the Capital Gain Tax on Land, Building And Machineries. Since the Lease deed was registered in Mar 2010 and then in Nov 2010 we started the construction of Factory Building overit. So if i am correct than surplus will be taxed as Short Term Capital Gain Tax.

My Questions are:

1) We are selling the property at below than the Authority Circle Rates, then which value will be taken as Sale Consideration - Actual Sales Value (which is below circle rates) or the Circle rate ?

2) Is there any way through which we can plan for Tax Savings on Capital Gains Tax?

3) We have business loss and depreciation loss during the current Financial year, Whether the Business Loss and Unabsorbed Depreciation can be set off against the Short Term Capital Gains ? So should we make the sale before 31st March 12?

4) Whether we have to raise invoices for Selling the Machines ? or only the Slump Sale Contract is enough?


Kindly provide your valuable opinions urgently. 


Your case prima facie is not of Slum Sale as business as a going concern is not being sold. You are retaining stocks, debtors and liabilities. It is more like an itemised sale and will suffer short term capital gain as the business was established in 2010 only.


The AO is constrained to adopt circle rate for sale consideration in respect of land and building.


Current year business loss can be adjusted against STCG. There will not be any depreciation on transferred assets (building and machinery) as the sale consideration will be reduced from respective wdv.


It would be better that sale is executed in current year itself to avail adjustment of business loss against current year STCG. Next year you will be able to adjust only unabsorbed depreciation.




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