CAPITAL GAIN ON BUSINESS ASSETS

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This discussion clarifies the tax implications of selling business assets, specifically a passenger bus. The initial query questions whether a profit of Rs. 5,00,000 from selling a bus after four years is subject to short-term capital gains tax. The response indicates that this would be treated as normal profit, not capital gains, as capital gains tax typically applies only to shares. It also touches upon the concept of 'block of assets' for multiple depreciable assets, confirming its applicability but reiterating that short-term capital gains or losses do not apply in such scenarios.

bikash rai

bikash rai (Querist)

10 September 2021 Dear Sir/ Madam,

Q.1- I have sold a BUS for Rs.30,00,000/- used in CARRYING Passenger after 4 years on June-2020 and Value of Vehicle FY 2019-20 After Depreciation Rs. 25,00,000/- in Balance Sheet. I have get profit Rs.5,00,000/-. I do not have any other Vehicle till date in Business. In this case , Will I have to pay Short term Capital Gain Tax on Rs.5,00,000/-?
Q. 2- If Capital Gain Tax applicable on this case , then How to calculate ? if Not Applicable Capital Gain Tax, then Why not Applicable ?

Please Reply as early as possible.

Thanking You
Bikash Rai

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

11 September 2021 1 It will be considered as normal profit on sale of assets.
2 Capital gains tax applicable only on sale of shares. Profit on sale will be part of profit .

bikash rai

bikash rai (Querist)

11 September 2021 Thank Sir,
If I have more than one bus which Depreciation value Same. Then Concept of Block of Assets applicable? And also STCG / STCL Applicable?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

11 September 2021 In such a case block of assets applicable. No STCG/ STCL applicable.

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