Case studies: Computation of WDV of intangible assets and capital gains on transfer from ‘Goodwill’
- Blog|News|Income Tax|
- < 1 minute
- By Taxmann
- |
- Last Updated on 19 July, 2021
Latest from Taxmann
Section 50 of the Income-tax Act contains provisions for computation of capital gain in case of transfer of depreciable assets. The Finance Act, 2021 has inserted a new proviso to section 50(2). It provides that the CBDT may prescribe a manner to determine the WDV of the block of asset and short-term capital gain if goodwill is forming part of that block and depreciation has been claimed thereon. Thus, if a block of intangible asset contains goodwill and it ceases to exist, the capital gain on such block shall be calculated in the manner prescribed by the Board.
The CBDT has accordingly notified Rule 8AC vide Notification No. 77/2021, dated 07-07-2021. This rule contains provisions for the following scenarios:
(a) Computation of WDV of block of intangible assets containing goodwill [Rule 8AC(2)];
(b) Deemed capital gains if block of intangible assets ceases to exist [Rule 8AC(3)];
(c) Exception to Rule 8AC(3) if block contains only goodwill [Rule 8AC(4)]; and
(d) Computation of capital gains on transfer of goodwill [Rule 8AC(5)].
This write-up has explained the provisions related to goodwill with the help of a few practical case studies.
Read the Full Article Citation: Rahul Singh - [2021] 128 taxmann.com 236 (Article)
Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.
Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.
The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:
- The statutory material is obtained only from the authorized and reliable sources
- All the latest developments in the judicial and legislative fields are covered
- Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
- Every content published by Taxmann is complete, accurate and lucid
- All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
- The golden rules of grammar, style and consistency are thoroughly followed
- Font and size that’s easy to read and remain consistent across all imprint and digital publications are applied
Sign Up
To subscribe to our weekly newsletter please log in/register on Taxmann.com
Latest Books
Everything on Tax and Corporate Laws of India
To subscribe to our weekly newsletter please log in/register on Taxmann.com
CA | CS | CMA
