Capital gain

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Querist : Anonymous

Querist : Anonymous (Querist)

14 April 2012 A company sold a depreciable building- WDV 10 lakhs for 14 lakhs. later constructed a new building at the cost of 4 lakhs. the block exists and have positive value of above rs.50 lakhs. what will be the stcg? what treatment under IT Act and under Company Act for these transactions? Please help me.

CA Kishore Tallam

CA Kishore Tallam (Expert)
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14 April 2012 As per books of accounts, profit / loss on sale of asset is = Sale consideration - WDV till the date of sale.
As per income tax, if both block exists and value is available, then there will not be STCG or Terminal Depreciation.
Rs. 14 lacs will be deducted from the block and Rs. 4 lacs will be added to the block.

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Querist : Anonymous

Querist : Anonymous (Querist)

14 April 2012 Thank you Sir for your reply. this means, suppose total business profit Rs 6 Lakhs and Profit on sale of Building Rs 4 lakhs total profit as per P&L Rs 10 lakhs. but I have to pay tax only on Rs. 6 Lakhs only as no STCG will arise.

CA Kishore Tallam

CA Kishore Tallam (Expert)
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14 April 2012 Yes. That Rs. 4 lacs profit will be deducted from the IT Computation.

Querist : Anonymous

Querist : Anonymous (Querist)

14 April 2012 That's a great thing sir. once again thank you.

CA Kishore Tallam

CA Kishore Tallam (Expert)
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14 April 2012 You are welcome..

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