Regarding sale of asset....... (Income Tax)

This query is : Resolved

Author : Anonymous

( Author )
26 June 2012

sir,
suppose,i purchased an asset in 10 years back at an amount of rs. 1000000. Today its w.d.v is 100000. if i sale it rs. 2000000 than what should be its treatment in income tax. Is fully rs. 1900000 is STCG or 900000 is business profit and 1000000 is STCG? and what is tax liability? and only one asset is in block.

Siddhartha Bhardwaj

( Expert )
26 June 2012

As per Section 50, where a depreciable asset is sold and the sale price exceeds the WDV, the difference between the sale price and WDV shall be taxable as STCG.

So, in this case, Rs. 19 lakh (20 lakh - 1 lakh) shall be taxable as STCG u/s 50.

Author : Anonymous

( Author )
26 June 2012

thanks......

Siddhartha Bhardwaj

( Expert )
26 June 2012

You are welcome. You should use the thanks button to convey your thanks.

Author : Anonymous

( Author )
26 June 2012

sir, can u explain what amount of tax rate is applicable....and what is tax amount?

sir, if it is related with electrical installation or building or plant & machinery, answer will be same or differ?

Siddhartha Bhardwaj

( Expert )
26 June 2012

1. The STCG shall be taxable at normal rates (slab rate in case of individual & HUF and 30% in case of company/firm).

2. Answer will be same for ALL depreciable assets.

Author : Anonymous

( Author )
26 June 2012

sir, one more question is that if i purchased an asset in 1 april 2010 and sold it 31 july 2011. than depreciation will charge only for 2010-11 or 3 months more for 11-12....in case of income tax....not according to companies act.

Siddhartha Bhardwaj

( Expert )
27 June 2012

Under Income Tax Act, depreciation is admissible only on those assets which are existing at the END OF THE YEAR.

There is NO concept of depreciation for part of the year in income tax.