Assess Has Sold Depreciable Assets (Motor Car) For Rs.5 and Opening wdv For the same assets was rs. 3 and he has also bought new motor car for Rs.7 during the year than what about depreciation and Short term capital gain ?????????????///
jayesh khokhariya (Practice) (81 Points)
01 January 2016Assess Has Sold Depreciable Assets (Motor Car) For Rs.5 and Opening wdv For the same assets was rs. 3 and he has also bought new motor car for Rs.7 during the year than what about depreciation and Short term capital gain ?????????????///
Tony John
(Chartered Accountant)
(6085 Points)
Replied 01 January 2016
Section 50(1) of Income Tax Act (regarding capital gains on transfer of depreciable asset) shall apply when WDV of a block of assets on the last day of the previous year is zero or block ceases to exist. In the given case, the block is existant on the last day of the previous year. Moreover closing WDV of the block is 3+7-5=5 which is greater than zero.
Hence in my opinion, no capital gains shall arise during the previous year. As regards depreciation, it will be calculated as per rates applicable to the block based on 180days/full year criteria on Rs. 5
Manoj BG
(Tax Professional and in Service)
(1795 Points)
Replied 01 January 2016
Agree with experts. Depreciation would be chargeable on Rs.5 lakhs (being balance left after deducting sale value from op WDV plus new addition) and no capital gain would arise. If new car put to use for >= 180 days, then full rate of depreciation would applies on Rs.5lakhs otherwise it would be half of effective rate of depreciation.
Thanks and Regards,
Manoj B. Gavali
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