Ascertainment of Income

[SUDHAKAR SIVARAMAN]

Dear friends,

My client was doing Tanishq franchise showroom. In the month of June 2022, Tanishq company tookover the francise business and paid the following amount.

1. For assets (furniture, computer, interior etc) 1 crore

2. For business loss made by franchise from beginning- Rs.1.5 crore

3. Other service charges paid-Rs.1 crore

Now my question is point no.1- the differance between wdv at the beginning of the year 01.04.2022 and Rs.1 crore, can be treated as either profit/ loss. Is it correct?

For point no.2- How to account in books, whether i have to pay income tax for entire amount of this Rs.1.5 crore.

For point no.3- Whether i can treat it as goodwill and for this also whether i have to pay income tax full?

Kindly clarify

AI Summary

Client Seeks Tax Guidance on Franchise Takeover Payments; Possible Slump Sale Implications Under Section 50B A client involved in a Tanishq franchise business had their operations taken over by the company in June 2022. The company paid 1 crore for assets, 1.5 crore for business losses, and 1 crore for other service charges. The client seeks clarification on tax treatment: whether the difference between the written-down value and the asset payment is profit/loss, if the 1.5 crore is taxable, and if the service charges can be treated as goodwill. A respondent suggests this may be a slump sale, affecting tax treatment under section 50B, and advises consulting an expert for detailed tax planning.