Capital gain

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ankit palore (Querist)
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30 January 2015 Pvt. Ltd. company incorporated in F.Y. 2013-14. during the year company had not started any business( obective of company is running hotel).Company had purchased one land with building, and a flat at different location.

My question is whether the property purchased shown as fixed asset or investment in balance-sheet, so that if in future company sold the property tax should be lower.

Because if property shown as fixed asset its became depreciable asset and chargeable at normal rate i.e 30%, always short term capital gain.

if shown as investment than long term capital will taxed at 20%.

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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30 January 2015 it is not investment if it is going to be used for hotel business.

land is never depreciated but building is depreciated.

CA NAVEEN SINGLA

CA NAVEEN SINGLA (Expert)
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30 January 2015 It would b shown under Fixed Assets.

Furthermore As per Concept of Terminal Benefit and Balancing Charge. Capital gain on Depreciable Assets to be charged when the Sale Proceeds exceeds the Cost of Assets. If you sell depreciable Assets and sale Proceeds are below Cost of Assets then Balancing Charge concept would be apply.

Take an example If Purchase Building for Rs. 5000000/-

Dep.at 10%.
After 5 years WDV is Rs. 2952450/-
Sale Proceeds is
1st Case 4900000/-

The Difference is Balancing Charge to meet the Cost of Assets.
If Sold for 5200000/-
Capital gain would be charged on Rs. 200000/-

Note:-
Depriciable Assets are always taxed less as compared to non Depreciable Assets.

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