STT & Slump Sale

Capital Gains

STT

Securities Transaction Tax (STT) is the tax payable on the value of taxable securities transaction.

STT was introduced in India by the 2004 budget and is applicable with effect from 1st October2004.

What all is covered by Securities?Securities definition is as per section 2(h) of the Securities Contracts (Regulation) Act, 1956, it mean Equity Shares and Equity Derivatives (i.e. Futures and Options).

Contd.

What are taxable transactions?

Purchase and Sale of securities through a recognised stock exchange in India. STT is not applicable on off-market transactions.

What rate is STT payable?

STT is applicable at different rates depending upon the security (whether equity or derivative) and the transaction (whether purchase or sell).

Note: Service Tax, Surcharge and Education Cess are not applicable on STT.

Contd.

STT applicable for Equity TransactionsDelivery Transactions Purchase: 0.125% of Turnover i.e. (Number of Shares * Price)Sell: 0.125% of Turnover i.e. (Number of Shares * Price)

Intra-day TransactionsPurchase: NILSell: 0.025% of Turnover i.e. (Number of Shares * Price)

Contd.

STT applicable for Derivative Transactions

Future Transactions

Purchase: NIL

Sell: 0.017% of Turnover i.e. (Number of Lots * Lot Size * Price)

Option Transactions

Purchase: NIL at the time of purchase of option. However the purchaser has to pay 0.125% of the Settlement Price i.e. (Number of Lots * Lot Size * Strike Price), in case of option exercise

Sell: 0.017% of Premium

Contd.

Income Tax and STT

Taxation of profit or loss from securities transactions depends on whether the activity of purchasing and selling of shares / derivatives is classified as

investment activity

or business activity.

Treatment of STT also depends upon whether the income from these securities transactions are included under the head

“Income from Capital Gains” or

under the head ‘Profits and Gains of Business or Profession’.

Scenario 1: ‘Income from Capital Gains’

This refers to the scenario where the assessee is either Salaried or is engaged in some other business or profession and trading in securities is not the main line of business.

In such cases gains or losses from securities transactions are taxed under the head “Income from Capital Gains”.

Gains or losses are subject to Short Term Capital Gains (STCG) or Long Term Capital Gains (LTCG) tax depending upon the period of holding.

Contd.

Any equity share, which has been sold through a recognised stock exchange and on which STT has been paid, is entitled to exemption from LTCG under Section 10 (38) of the Act.

Similarly, in case of STCG of such shares, the gains shall be taxed only at 15%, plus surcharge and education cess under section 111A

Important points to note:

STCG and LTCG rates of 15% and NIL are available only if the specified security is sold through a recognised stock exchange.

Private deals or transactions, not routed through a recognised stock exchange in India, will not be covered.

The purchase of the specified securities could be through any mode and need not be through a recognised stock exchange

Contd.

The exemption is not available to transactions where STT has not been paid since LTCG is exempt, Long Term Capital Loss, arising from these specified securities, cannot be set-off against any other gain/income. This loss shall lapse.

As per section 40(a)(ib) of the Income tax Act, STT cannot be claimed as an expense in computing the income chargeable under Capital Gains

Slump Sale

In simple words, ‘slump sale’ is nothing but transfer of a whole or part of business concern as a going concern; lock, stock and barrel.

As per S. 2(42C), introduced by the Finance Act, 1999, ‘slump sale’ means the transfer of one or more undertakings as a result of the sale for a lump sum consideration without values being assigned to the individual assets and liabilities in such sales.

Contd.

A sale of the undertaking would attract capital gains tax.

The income chargeable under the head "capital gains" is to be computed by deducting from the full value of the consideration received or

accruing as a result of the transfer of the capital asset, the following amounts,

namely: -· The cost of acquisition of the asset;

The cost of any improvement thereto; and

Expenditure incurred wholly and exclusively in connection with such transfer.

Expenditure incurred wholly and exclusively in connection with such transfer.

The net worth of the undertaking is the aggregate value of the assets of the undertaking or division, as reduced by the value of liabilities of such undertaking or division, as appearing in its books of account.

For this purpose, in the case of depreciable assets, the written down value of the block of assets and in the case of other assets, the book value of such assets, has to be considered.

Methodology:

As per section 50B of the Income-tax Act.Particulars Rs. Lump-sum sale consideration (A) XXXXX Less: Net worth of the undertaking (B) (XXXXX) Less: Expenditure incurred in connection with the sale of the undertaking (C) (XXXXX) Short-term/long-term capital gains (A) - (B) - (C) XXXXX

The net worth of the undertaking is to be computed as under: Particulars Rs. Tax WDV of the depreciable assets of the undertaking (A)

XXXXX Add: Book value of the assets other than depreciable assets (excluding the value of revaluation, if any) (B) XXXXX Less: Book value of liabilities (C) (XXXXX) Net worth of the undertaking (A) + (B) - (C) XXXXX

Module: 04

Profits and Gain of Business or Profession

What is the basis of charge [Sec. 28]

Following are chargeable to tax:

Income derived by a trade, professional or similar association.

The value of any benefit or perquisite whether convertible into money or not arising from business or the exercise of a profession.

Export incentive available to exporters.

Contd.

Any interest salary, bonus, commission or remuneration received by a partner from the firm.

Any sum received for not carrying out any activity in relation to any business.

or not to share any know how, patent, copyright trade market etc.

Any sum received under a Keyman Insurance Policy.

Profits and gains of managing agency.

Income from speculative transactions.

Meaning of business

u/s 2(13) business includes any

Trade

Commerce

Manufacture

Or any adventure or concern in the nature of trade, commerce or manufacture.

It includes every facets of an occupation carried on by a person with a view to earning profit.

Production of goods from raw material.

Buying and selling of goods to make profits.

Providing services to others.

Business should have:

Significance of profit motive

Business and rendering services to others.

Business can not be carried on with oneself.

Business includes trade and manufacture.

Business income not taxable under the head Profit and Gains of Business or Profession:

Rental income in the case of dealer in property.

Dividend on share in the case of dealer in shares.

Winning from lotteries etc (even if derived as a regular business activity).

Meaning of profession or vocation

As per section 2(36)

Profession includes vocation

The word profession implies professed attainments in special knowledge as distinguished from mere skill, special knowledge which is to be acquired only after patient study and application.

In IT act vocation implies natural ability of a person for some particular work.

The word vocation is similar to earning meaning the way in which a man passes his life.

Business, profession and vocation does not have any material significance while computing taxable income.

What are the basic principles for arriving at business income?

Business or profession carried out by the assessee.

Business or profession should be carried on during the previous year.

Real profits Vs anticipated profits.

Real profit Vs notional profit.

Recovery of sums already allowed as deduction.

Mode of book entries not relevant.

Illegal business.

Following receipts are taxable even if no business or profession is carried on by the assessee:

Sale of depreciable asset.

Sale of an asset used for scientific research.

Recovery or excess recovery against bad debts.

Sum received after discontinuance of a business or profession.

What is the scheme of business deduction/allowances: Sec.29

Onus of proof (responsibility of the assessee to prove that a particular deduction is admissible in his case)

Allowances are cumulative.

Expenditure should relate to the PY.

Business should be carried out in the PY.

Expenditure should have been incurred in connection with the assessee’s business.

Benefits of expenditure may extend to somebody else (lease).

Benefits of expenditure may extend beyond PY.

Contd.

No allowance in respect of expenditure incurred before setting up of business.

No allowance in respect of non assessable business.

Expenditure relating to illegal business.

No allowance in respect of anticipated losses.

No deduction in respect of depreciation of investment.

Relevance of distinction between capital and revenue expenditure.

What are the specific deductions under the Act:

Rent, rates, taxes, repairs and insurance for building [Sec.30]

The rent of premises.

The amount of repairs not being capital expenditure.

Any sum on account of land revenue, local rates or municipal taxes.

Amount of any premium in respect of insurance against risk of damage or destruction of the premises.

Repairs and insurance of machinery plant and furniture (not being capital expenditure).

Depreciation allowance u/s 32.

Conditions for claiming depreciation

Asset must be owned by the assessee.

It must be used for the purpose of business or profession.

It should be used during the relevant previous year.

Depreciation is available on tangible as well as intangible assets.

TAX Management

“Set off and carry forward of losses ” What is the mode of set off and carry forward?

Following steps should be followed:

Step:1 Inter source adjustment under the same head of income.

Step:2 Inter head adjustment in the same assessment year is applied only if a loss cannot be set off under step 1.

Step:3 Carry forward of a loss. Step 3 is applied only if a loss cannot be set off under steps 1 & 2.

Inter source adjustment – how made?

The provisions of Sec.70 are as follows:

General rule:

If the net result for any assessment year, in respect of any source under any head of income, is a loss,

the assessee is entitled to have the amount of such loss set off against his income from any other source under the same head of income for the same assessment year.

Exceptions:

Loss from speculation business - Loss in a speculation business can be set off only against the profit in a speculation business.

Loss from a specified business (Sec.35AD).

Long term capital loss.

Loss from the activity of owning and maintaining race horses.

Loss cannot be set off against winnings from lotteries, crossword puzzles etc.

Loss from sale of securities.

Other points:

Losses from HP can be set off against income from any other HP.

Loss from a non speculation business can be set off against income from speculation or non speculation business.

Loss from a non speculative business can be set off against income from business specified under Sec.35D.

Contd.

Short term capital loss can be set off from any capital gain.

Under the head “Income from other sources” loss from any activity can be set off against any income but other than winning from lotteries, crossword puzzles etc.

Inter head adjustment - How made?

General rule:

Where the net result of computation made for any assessment year in respect of any head of income is a loss, the same can be set off against the income from other heads.

Exceptions:

Loss in a speculation business.

Loss under the head capital gains.

Loss in a business specified under Sec.35D

Loss from the activity of owning and maintaining race horses.

Business loss can not be set off against salary income.

Loss cannot be set off against winning from lotteries etc.

Other points: (Important)

Loss under the head “Income from HP” can be set off against business income, capital gains, salary income or income from other sources.

Business loss can be set off against property income, capital gains or other income.

A loss under the head income form other sources (not being from the activity of owning and maintaining race horses) can be set off against salary income, property income, business income or capital gains.

Contd.

No order of priority is given in the Act.

One should try to first set off those losses which cannot be carried forward to the next year.

Carry forward of losses – How to set off

If a loss cannot be set off either under the same head or under the different heads, because of absence or inadequacy of the income of the same year, it may be carried forward and set off against the income of the subsequent year.

Contd.

Under the act the following losses can be carried forward:

Loss under the income from house property.

Loss under the head profits and gains of business or profession.

Loss under the head capital gains.

Loss from the activity of owning and maintaining race horses.

Carry forward and set off of business loss other than speculation loss [Sec.72]:

The right of carry forward and set off of loss arising in a business or profession is subject to the following restrictions:

Loss can be set off only against business income. Following points should be noted:

Can be set off only against business income.

Not necessarily the same business.

Loss from a specified business.

Losses can be carried forward by the person who incurred the loss (Exception:- Sec.72A, 72AA).

Loss can be carried forward for 8 years.

Return of loss should be submitted in time [Sec.80].

Continuity of business is not necessary.

Carry forward and set off of speculation loss [Sec.73]

Speculative transactions means a transaction in which a contract for the purchase or sale of any commodity, including stocks and shares, is periodically settled, otherwise than by the actual delivery or transfer of the commodity or scrips.

Speculative loss can be set off only against speculative business.

Can be carry forward for only for 4 years.

Continuity of business is not necessary.

Return of loss should be filed in time.

Carry forward and set off of losses of capital loss:

Whole of the loss can be carried forward to the following assessment year.

Long to long term

Short to any CG

Such loss can be carried forward for 8 AYs immediately succeeding the AY in which the loss was first computed.

Carry forward and set off of loss from house property [Sec.71B]

Losses on sale of shares, securities or units [Sec.94(7)]

TAX ManagementModule: 03

“Capital Gains”

What is the basis of charge [Sec.45]

Any gain arising from the transfer of a capital asset during a previous year is chargeable to tax under the head capital gains.

If it is not eligible for exemption under section 54, 54B, 54D, 54EC, 54F, 54G, and 54GA.

What is included in and excluded in the capital asset?

Capital asset is defined to include property of any kind, whether fixed or circulating, movable or immovable, tangible or intangible.

Assets not treated as capital asset:

Any stock in trade, consumable stores or raw material held for the purpose of business or profession.

Personal effects of the assessee.

Agricultural land if not situated:

In any area within the territorial jurisdiction of a municipality or a cantonment board having a population of 10,000 or more or

In any notified area.

6½ % Gold bonds, 1977 or 7% Gold bonds, 1980, National Defense Gold Bonds, 1980.

Special Bearer Bonds, 1991.

Gold Deposits Bonds issued under Gold Deposit Scheme, 1999.

Contd.

Short term and long term capital asset:

Short term capital asset means a capital asset held by an assessee for not more than 36 months, immediately prior to its date of transfer.

In other words, if a capital asset is held by an assessee for more than 36 months, then it is known as long term capital asset.

When such period is taken as 12 months?

Equity, preference debentures, bonds, G-Secs, Units of UTI, Units of MF (specified u/s 10(23D), ZCBs whether listed or not, sold within 12 months would attract short term CG.

> 12 months è Long Term CG.

Why capital assets are divided into short term/long term?

Tax incidence depends on the asset based on the whether it is a short term or long term CG.

Long term CG is normally taxed at a lower rate and vice versa.

In case of depreciable asset, CG if any is taken as short term capital gain, irrespective of period of holding.

For the above purpose power generating unit is excluded as is it is deprecated on straight line basis.

What is transfer of capital asset?

Transfer, in relation to a capital asset includes sale, exchange or relinquishment of the asset or the extinguishment of any rights therein or the compulsory acquisition thereof under any law [Sec. 2(47)].

What is revocable transfer?

In any of the following situations, a transfer is a revocable transfer:

Situation 1:

If an asset is transferred to a trust and it is revocable during the lifetime of the beneficiary.

X transfers a house property to a trust for the benefit of A and B. However, X has a right to revoke the trust during the lifetime of A and or B.

It is revocable transfer and income arising form the house property is taxable in the hands of X.

Situation: 2

If an asset is transferred to a person and it is revocable during the lifetime of tranferee.

X transfers a house property to A. However, X has a right to revoke the transfer during the lifetime of A.

It is a revocable transfer and income arising from the house property is taxable in the hands of X.

Situation: 3

If an asset is transferred before April 1, 1961 and it is revocable within six years.

X transfers an asset on March 31, 1961. It is revocable on or before June 6, 1963.

It is revocable transfer.

Income arising from the asset is taxable in the hands of X.

Conversely, if X transfers an asset before April 1, 1961 and it is revocable after 6 years it is not taken as revocable transfer.

Situation: 4

If the transfer contains any provision to re-transfer the asset to the transferor directly or indirectly, wholly or partly.

X transfers an asset. Under the terms of transfer, on or after April, 1998, he has a right to utilize the income of the asset for his benefit.

However, he has not exercised this right as yet.

On or after April 1, 1998, income of the asset would be taxable in the hands of X, even if he has not exercised the aforesaid right.

Situation: 5

If the transferor has any right to reassume power over the asset (or income there from) directly or indirectly, wholly or partly.

X transfers an asset. Under the terms of transfer, he has a right to use the asset for the personal benefits of his family members whenever he wants. Till date, he has not exercised this right.

It is a revocable transfer. The entire income from the asset would be taxable in the hands of X.

Conclusions

The following conclusions can be drawn:

There is an asset which is transferred under a “revocable transfer”.

Income from the aforesaid asset is taxable in the hands of transferor.

Such income is taxable as and when the power to revoke arises.

The above rule is applicable even if the power to revoke has not been exercised so far.

TAX ManagementModule: 02

“Income from other sources”

What is the basis for charge [Sec.56]

Income from other sources is the last and residual head of income.

Sec.56 (1) covers any income which does not fall under any other head of income.

However, Sec.56 (2) specifies 8 incomes which are always taxable under the head “Income from Other Sources”.

Special Provisions – Always taxable under this head:

Dividend:

u/s 2(22)(e) dividend from a foreign company is taxable in the hands of share holders.

Winning from lotteries:

Winning from lotteries

Crossword puzzles

Race including horse races

Card game and other game of any sort

Or form of gambling

Or betting of any form or nature whatsoever.

Contd.

Employees’ contribution towards staff welfare scheme:

Any sum received by the assessee from his employees as contributions to any staff welfare scheme is taxable in the hands of the employer if it is not taxable as business income.

Interest on securities:

Interest on debentures, Govt. securities is taxable if it is not taxed under the business income.

Rental income of machinery, plant or furniture:

Rental income from machinery, plant or furniture let on hire is taxable as income from other sources.

Contd.

Rental income of letting out of plant, machinery or furniture along with letting out of building and the two meetings are not separable.

Sum received under Keyman Insurance Policy

Gift

Any sum or property is received during PY without consideration by an individual or a HUF from any person or persons exceeds Rs.50,000, the whole of the amount is taxable.

Interest on compensation or enhanced compensation

Examples:

Income from subletting

Interest on bank deposits and loans

Income from royalty

Director’s fees

Ground rent

Agricultural income from a place outside India

Director’s commission for standing as a guarantor to banker

Director’s commission for underwriting shares of new company

Examination fees received by the teacher from other than his employer

Rent of plot of land

Contd.

Insurance commission

Mining rent and royalties

Annuity payable to the lender of a trade mark

Compensation for use of business asset

Family pension received by family members of deceased employee

Interest on securities issued by a foreign govt.

Interest on employees PF if its an unrecognized

Dividend

Dividend from an Indian company is not taxable in the hands of the share holders (company è Dividend distribution tax u/s 115-0).

However, dividend received from a foreign company is taxable u/s 2(22)(e) as Income from Other Sources.

Dividend:

Divided means the amount paid to or received by a shareholder in proportion to his shareholding in a company out of the total sum so distributed.

What is not dividend?

Distribution on liquidation of company.

Distribution to debenture holders.

Any payment by way of loan or advance to a shareholder, holding substantial interest.

Distribution on reduction of capital.

Distribution entailing the release of company’s assets.

Winning from lotteries and others Sec.56 (2) (ib):

It includes:

Lotteries

Crossword puzzles

Races

Winnings from betting

Winning includes draw of lots or by chance or in any other manner (card game, game show an entertainment programme on television or electronic mode in which people compete to win prizes or any other similar game)

If winnings is not there then it not taxable under this section.

Tax incidence on Winning from lotteries and others Sec.56 (2) (ib):

Gross winning from lotteries, crossword puzzles, races including horse race, card games and other games of any sort or form gambling or betting of any nature whatsoever

are chargeable to income tax at flat rate of 30% (+SC+EC+SHEC) on the gross winnings.

Without any allowance or expenditure.

Contd.

u/s 194B and 194BB, tax is deductible @ 30% on payment in respect of winnings from lotteries or crossword puzzle or card games or other games exceeding Rs.10,000.

In case of winnings from horse races payment exceeding Rs.5,000 are subject to tax deducted at a source @ the rate of 30%.

Rs.5,000 up to June 30, 2010

Rs.2,500 up to June 30, 2010

Interest on securities Sec.56(2)(id)

This income is chargeable here if it is not charged under the business income u/s 28.

Interest exempt from tax:

On notified securities and bonds or certificates.

On capital investment bonds in case of HUFs.

By NRI from notified bonds (NRI Bonds etc.)

On gold deposit bonds.

On notified debenture of a pubic sector company.

On deposit made by a retired Govt. employee or an employee of public sector company.

Bond Washing Transactions [Sec.94(1)]

Selling the securities to a friend or relative some time before the due date and acquiring back the same securities after the due date of interest is over.

This practice is generally adopted by high income class assessees to avoid the tax while transferring the securities to low income class assessess on the eve of due date of payment of interest.

Contd.

To prevent the avoidance of tax in this manner, section 94(1) provides that, the interest received by the tranferee will be deemed as income of the transferor and accordingly, it will be included in the total income of the transferor and not the tranferee.

Sales cum interest [Sec.94(2)]

Another method of avoiding tax is sale of securities cum interest.

Exceptions:

Provisions discussed above are not applicable if the security owner proves to the satisfaction of the Assessing Officer that:

There has been no avoidance of income tax.

Deductions permissible from ‘income from other sources’:

Commission or remuneration for realizing dividend or interest on securities [Sec.57 (1)]:

Any reasonable sum paid by way of commission or remuneration to a banker or any other person for the purpose of realizing dividend (if it is taxable in the hands of recipient) or interest on securities on behalf the assessee is deductible.

Contd:

Deduction in respect of employee's contribution towards staff welfare schemes [Sec.57 (ia)].

Repairs, depreciation in the case of letting out of plant, machinery, furniture, building.

The following expenses are deductible:

Current repairs of building.

Insurance premium in respect of insurance against risk of damage of premises.

Repairs and insurance of machinery, plant and furniture.

Depreciation.

Standard deduction in the case of family pension [Sec.57(iia)]

The amount deductible is Rs.15,000 or 331/3 % of such income, whichever is less.

For this purpose, “family pension” means a regular monthly amount payable by the employer to a person belonging to the family of an employee in the event of his death.

Any other expenses for earning income [Sec.57(iii)]

If following basic conditions are satisfied any other expenditure is deductible u/s 57(iii):

The expenditure must be laid out or expended wholly and exlcusively for the purpose of making or earning the income.

The expenditure must be in the nature of capital expenditure

It must not be the nature of personal expenses of the assessee.

It must be laid out or expended in the relevant previous year and not in any prior or subsequent year.

Contd.

Refer Page no’s. 518, 519 and 520 for your better understanding about gifts and its valuation.

Who are called as relatives for IT purpose etc..

End of module 02…

Profits and Gain of Business or Profession

What is the basis of charge [Sec. 28]

Following are chargeable to tax:

Income derived by a trade, professional or similar association from specific services performed for its members.

The value of any benefit or perquisite whether convertible into money or not arising from business or the exercise of a profession.

Export incentive available to exporters.

Contd.

Any interest salary, bonus, commission or remuneration received by a partner from the firm.

Any sum received for not carrying out any activity in relation to any business.

or not to share any know how, patent, copyright trade market etc.

Any sum received under a Keyman Insurance Policy.

Profits and gains of managing agency.

Income from speculative transactions.

Meaning of business

u/s 2(13) business includes any

Trade

Commerce

Manufacture

Or any adventure or concern in the nature of trade, commerce or manufacture.

It includes every facets of an occupation carried on by a person with a view to earning profit.

Production of goods from raw material.

Buying and selling of goods to make profits.

Providing services to others .

Business should have:

Significance of profit motive

Business and rendering services to others

Business can not be carried on with oneself.

Business includes trade and manufacture.

Business income not taxable under the head Profit and Gains of Business or Profession:

Rental income in the case of dealer in property.

Dividend on share in the case of dealer in shares.

Winning from lotteries etc (even if derived as a regular business activity).

Meaning of profession or vocation

As per section 2(36)

Profession includes vocation

The word profession implies professed attainments in special knowledge as distinguished from mere skill, special knowledge which is to be acquired only after patient study and application.

In IT act vocation implies natural ability of a person for some particular work.

The word vocation is similar to earning meaning the way in which a man passes his life.

Business, profession and vocation does not have any material significance while computing taxable income.

What are the basic principles for arriving at business income?

Business or profession carried out by the assessee.

Business or profession should be carried on during the previous year.

Real profits Vs anticipated profits.

Real profit Vs notional profit.

Recovery of sums already allowed as deduction.

Mode of book entries not relevant.

Illegal business.

Revenue Vs Capital.

Following receipts are taxable even if no business or profession is carried on by the assessee:

Sale of depreciable asset.

Sale of an asset used for scientific research

Recovery or excess recovery against bad debts

Sum received after discontinuance of a business or profession.

What is the scheme of business deduction/allowances: Sec.29

Onus of proof.

Allowances are cumulative

Expenditure should relate to the PY.

Business should be carried out in the PY.

Expenditure should have been incurred in connection with the assessee’s business.

Benefits of expenditure may extend to somebody else.

Benefits of expenditure may extend beyond PY.

Contd.

No allowance in respect of expenditure incurred before setting up of business.

No allowance in respect of non assessable business

Expenditure relating to illegal business

No allowance in respect of anticipated losses

No deduction in respect of depreciation of investment.

Relevance of distinction between capital and revenue expenditure.

What are the specific deductions under the Act:

Rent, rates, taxes, repairs and insurance for building [Sec.30]

The rent of premises.

The amount of repairs not being capital expenditure.

Any sum on account of land revenue, local rates or municipal taxes.

Amount of any premium in respect of insurance against risk of damage or destruction of the premises.

Repairs and insurance of machinery plant and furniture (not being capital expenditure).

Depreciation allowance u/s 32.

Conditions for claiming depreciation

Asset must be owned by the assessee.

It must be used for the purpose of business or profession.

It should be used during the relevant previous year.

Depreciation is available on tangible as well as intangible assets.