Block of asset concept

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This query is : Resolved

harsh (Querist)

27 September 2012 hi all
a car was purchased on june 2010 for rs 6.5lakh and sold on july 2010 for rs 6lakh.
another car was purchased on march 2012 for rs 8 lakh.

so can the loss on sale of car of rs 50,000 be added to the exiting block of asset. implying the total value of current car rs8.5lakh, before depreciation.
Is the treatment correct? if no, what should b the appropriate one? please reply in detail

Thank you

Pankaj Gupta

Pankaj Gupta (Expert)

27 September 2012 If you had more than one car in the block upto the date of sale, then your calculations are correct.

But if you had only one car then , such amount of 50000 will be considered as short term capital loss and can be adjusted from long term or short term capital gains.

For the new car value of car for the purpose of dep will be 8 lakhs.

harsh

harsh (Querist)

28 September 2012 According to the above dates, its clear that there was only one car at the date of sale. and the new car was purchased later.
The car is treated as a "Personal Asset" and not a "Capital Asset" , so the question of short term capital loss of rs 50,000 does not arise. Now, how is the loss treated with new car of rs 8,00,000?

Pankaj Gupta

Pankaj Gupta (Expert)

28 September 2012 When you are using the word BLOCK OF ASSET , it is clear that car is used for the purpose of business. And if any asset are used for business than they can never be personal effects.

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