Capital gain and depreciation

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This query is : Resolved

CA.Ritu Agarwal (Querist)

22 January 2014 3 Vehicle was purchased by a company on Feb 2012 for Rs. 16 lac each. i.e total 48 lakhs. Depreciation @40% as per co's act was charged by the company as the vehicle was used on hire.

Now on 30/11/2013 all the 3 vehicles were sold to a sister concern.
The WDV AS ON 1/04/2013 as per companies books WAS 27,06,438. and as per Income Tax Act it was Rs.33,30,890. Dep as per Income Tax Act 30%. The asset were sold for Rs. 28,56,000. .

what will be accounting treatment for both the companies.

will there be any capital gains.

How will the purchasing company record the assets and depreciation.

CA Mohit Bansal

CA Mohit Bansal (Expert)

22 January 2014 Please first correct your WDV as per Income Tax Act 1961,
It should be:
Cost...........................4800000
Less:
Depreciation
AY12-13.........................720000
(4800000*30%/2)
AY 13-14.......................1224000
30%(4800000-720000)
WDV as on 30/11/2013...........2856000

CA.Ritu Agarwal

CA.Ritu Agarwal (Querist)

22 January 2014 Actually that value comprises of other vehicles also. The block was already having some more vehicles.so the value given by u is correct. Now u can answer rest part.

Thanks

CA Mohit Bansal

CA Mohit Bansal (Expert)

22 January 2014 So you have to have account gain as per accounting norms in bboks of accounts wheras there will be short term capital loss in income tax.

CA.Ritu Agarwal

CA.Ritu Agarwal (Querist)

23 January 2014 I have sold exactly at wdv. how there will be loss. kindly compute and give figure.

CA Mohit Bansal

CA Mohit Bansal (Expert)

23 January 2014 Then there will be accounting gain only of (2856000-2706438)

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