Capital gain format for motor car

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Querist : Anonymous

Querist : Anonymous (Querist)

14 March 2013 Hello

have purchased motor car in sep 06 cost of same was inr 3,00,500/- & same is sold on 15.04.10 for Rs.1,44,000/-

wdv as on 31.03.10 was inr 156,862/-

kindly advise Capital gain / Loss wrkg and same needs to debit/ credit in p&L or capital account

thanks

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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14 March 2013 Please confirm the is any assets are in the same block as on the date of sale of car other than car.

OM SAI SRI SAI JAI JAI SAI

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Querist : Anonymous

Querist : Anonymous (Querist)

14 March 2013 YES

2ND MOTOR CAR WDV AS ON 31.03.10 INR 202799
BIKE WDV AS ON 31.03.10 INR 79382

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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14 March 2013 Then according to the income tax act no question of capital gain/loss on 15-4-2010.

According to the income tax act capital gain/loss on depreciated assets is always short-term capital gain/loss and such gain or loss shall be computed at the time of such block of assets WDV becomes 0(Zero) or negative at any time during the year. Thus in your case you have total WDV of the same block as on 31-3-2010 or as on the date of sale is Rs.4,39,043 and the sale consideration from such WDV is Rs.1,44,000 thus WDV after sale is Rs.2,95,043(4,39,043 -1,44,000) so WDV of that block doesn't zero or negative as on 15-4-2010 so no question of capital gain/tax as on 15-4-2010 as per income tax act.

However if you want to recognaise gain or loss in your books for such sold car then you deduct the WDV for that car as on the date of sale from the sale consideration and arrive gain or loss and credit to the P&L account if gain or debit to the P&L account if loss and the adjustment according to the income tax act has to be done at the time of computation of total taxable income.

Thus for your case if you want to recognaise gain/loss in your books then pass the following entry on 15-4-2010

Cash/bank a/c dr 1,44,000
Loss on sale of car a/c 12,862
To car a/c 1,56,862

(Being car no XXXX sold and difference of WDV and sale value treated as loss)

and also pass this entry

Profit & Loss a/c dr 12,862
To Loss on sale of car a/c 12,862
(Being loss on sale of car writte off to P&L account)

And for the purpose of income tax WDV of the block is 2,95,043 for the purpose of charging of depreciation for the F.Y. 2010-11.

OM SAI SRI SAI JAI JAI SAI

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Querist : Anonymous

Querist : Anonymous (Querist)

14 March 2013 Thanks for such quick & detail reply

still i have 1 small doubt

though car is sold then too we have to take dep on wdv 439043 - 144000 = 295043

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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14 March 2013 Yes, according to the income tax act it allowed depreciation on the balance amount of WDV after deduction of sale consideration from the WDV before to sale.

OM SAI SRI SAI JAI JAI SAI

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Querist : Anonymous

Querist : Anonymous (Querist)

14 March 2013 thanks for such a nice reply

om sai

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