Depriciation

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

11 May 2012 Dear expert

1.In one Company, they sold a car of Rs. 625000 and purchase a new car of Rs. 450000 and opening WDV of this block is Rs. 105000. Please suggest me the treatment under IT Act.

2. In other Company, they sold a machine of Rs. 90000 and its opening WDV is Rs. 100000 and block is not in existence. Please suggest me the treatment under IT Act.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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11 May 2012 1. STCG of Rs. 70,000/- shall arise.
2. Rs. 10,000/- shall be allowed as deduction u/s 32(1)(iii).

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Querist : Anonymous

Querist : Anonymous (Querist)

11 May 2012 Is there any chance that STCL arise?

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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11 May 2012 No there is no short term capital loss in case of depreciable assets.

Only STCG arises. Loss is allowed as deduction u/s 32(1)(iii)

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Querist : Anonymous

Querist : Anonymous (Querist)

11 May 2012 In first case, If company sold its car at Rs. 500000, then STCL arise of Rs. 55000 ?

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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11 May 2012 The block does not cease to exist. There is an asset in the block. Rs. 55,000/- shall be closing WDV on which depreciation shall be allowed.

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Querist : Anonymous

Querist : Anonymous (Querist)

16 May 2012 In first case, what would be the treatment of Rs. 70000, if block is in existence?

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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16 May 2012 Even if the block exists, STCG of Rs. 70,000 shall arise because the sale price exceeds the opening WDV and the purchase price.

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