Priya . (CA -PCC) (131 Points)
06 April 2010determine the depreciation / capital gain for the following:
1)opening balance of motor car = Rs.4.20 lakhs
Purchased in jan - 10 = Rs. 2.10 lakhs
Rate of depreciation = 15%
Motor car purchased in jan - 10 has been sold in march - 10 for Rs.2,30,000.
help me to get solved
2) opening balance of lorry = Rs.6lakhs
purhase in july -09 = Rs.1.50lakhs
Purchase in jan - 10 = Rs.10 lakhs
rate of depreciation = 30%
lorries have been sold for Rs.4,00,000.
Ratan Deep Saxena
(Asstt Manager (Accounts & Finance))
(2998 Points)
Replied 06 April 2010
Capital Gain on Motor Car
Sales Consideration: 230000
Less: WDV of Motor Car 194250(210000-15750) for depreciation
STCG 35750
regards,
ratan
Naga Praveen
(Chartered Accountant)
(304 Points)
Replied 06 April 2010
Please not that depreciation is not chargeable on the assets sold in a year.
1. Capital gain arises only when a block of assets ceases to exist or when the wdv of the assets becomes zero. In this case the block of motor car doesn`t cease to exist. So amount of depreciation is Rs 0.6 lacs calculated on Rs 4 lacs i.e, (opening WDV Rs 4.2 lacs+ Purchases Rs 2.1 lacs- Sales Rs 2.3 lacs).
2. In this case no depreciation is chargeable as complete block of lorries ceased to exist. You get a short term capital loss of Rs 13.5 lacs i.e ( Opening Rs 6 lacs+purch in jul Rs 1.5lacs+ purch in Jan Rs 17lacs- sales Rs 4lacs)
Naga Praveen
(Chartered Accountant)
(304 Points)
Replied 06 April 2010
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Please see my reply. What u said is wrong. Originally posted by : Ratan Deep Saxena |
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Capital Gain on Motor Car Sales Consideration: 230000 Less: WDV of Motor Car 202125 (210000-7875) for depreciation STCG 27875 regards, ratan |
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Naga Praveen
(Chartered Accountant)
(304 Points)
Replied 06 April 2010
I`ve calculated as per Income Tax Act, 1961
Kaushik Vankadkar
(Service)
(350 Points)
Replied 06 April 2010
| Motor Car | |
| Opening WDV | 420,000 |
| Add: Additions | 210,000 |
| 630,000 | |
| Less: Sales considerations | 230,000 |
| WDV | 400,000 |
| Less: Depreciation as below | 44,250 |
|
Closing WDV
Depreciation |
3,55,750 |
| Closing WDV | 400,000 |
| Less: Additions less than 180 days | 210,000 |
| 190,000 | |
| Depreciation @ 15% on above | 28,500 |
| Add: Depreciation for acquisition for less than 180 days @ 7.5% | 15,750 |
| Total Depreciation | 44,250 |
No capital gains in motor car as the block having balance and can be depreciated in next years
C.Balaji
(Learner)
(1867 Points)
Replied 06 April 2010
I agree Mr. Naga Praveen........
Please see this......
| Motor Car | Lorry | |
| opening | 420000 | 600000 |
| add : pur | 210000 | 1150000 |
| 630000 | 1750000 | |
| less : Sale | 230000 | 600000 |
| 400000 | 1150000 | |
| Dep | 60000 | - |
| STCG | - | 1150000 |
| Clo. Bal | 340000 |
Naga Praveen
(Chartered Accountant)
(304 Points)
Replied 06 April 2010
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Please not that depreciation is not chargeable on the assets sold in a year. Originally posted by : Kaushik Vankadkar |
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Motor Car Opening WDV 420,000 Add: Additions 210,000 630,000 Less: Sales considerations 230,000 Closing WDV 400,000 Depreciation Closing WDV 400,000 Less: Additions less than 180 days 210,000 190,000 Depreciation @ 15% on above 28,500 Add: Depreciation for acquisition for less than 180 days @ 7.5% 15,750 Total Depreciation 44,250 |
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Kaushik Vankadkar
(Service)
(350 Points)
Replied 06 April 2010
Dear Praveen,
Depreciation is not chargeable in the year of sale is applied when the block cease to exist or where there is a gain. In the given case the Motor car's block doesnot cease to exist and the remaining balance of the block after calculating the sale consideration is offered to depreciation.
I would also like to explain the rationale behind no depreciation in the year of sale:
Depreciation goes to P&L a/c which comes under the basket of normal slab rate and
the short term capital gains is also taxed by normal slab rate
So the point to ponder is even if you provide for the depreciation there will not be any change in tax liability. It will remain same in both the case.
Kaushik
Kaushik Vankadkar
(Service)
(350 Points)
Replied 06 April 2010
| Lory | |
| Opening WDV | 600,000 |
| Add: Additions more than 180 days | 150,000 |
| Add: Addtions less than 180 days | 1,000,000 |
| 1,750,000 | |
| Less: Sales considerations | 400,000 |
| Short term Capital loss | 1,350,000 |
As all lories have been sold so the block cease to exist and the block is nil. So the resultant balance is short term capital loss
Nitin Singhal
(Gaining knowledge...)
(320 Points)
Replied 06 April 2010
Praveen's answer is right and i agree with him that depreciation is not chargeable on an asset sold within the year
Lucky Jain
(student)
(210 Points)
Replied 06 April 2010
NOW PLZ ANY ONE FROM ABOVE WILL LET ME KNW IF MOTOR CAR IS COVERED UNDER DEFINITION OF CAPITAL ASSET AS PER SECTION 2(14)
Naga Praveen
(Chartered Accountant)
(304 Points)
Replied 06 April 2010
Motors cars used for business comes under Capital Asset.
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