Capital gain on depreciable asset
This query is : Resolved
24 December 2018
My client is partner ship concern. They have industrial land over which building was constructed in 2007. They had been running business of IT hardware in unit on which they had been claiming depreciation. In 2018 , they sold building .
For calculating Capital gain on land & building, land sale value as per circle rate was derived and indexation on cost of land was applied to calculate capital Gain. For building being depreciable asset, Sale value of entire building minus land value was Rs. 60 lac . Original cost of building constructed in 2007 is Rs. 22 lac on which depreciation till date was Rs. 15 lac & WDV of building is Rs 7 lac.
My query is whether Rs.60 lac minus Rs.22 lac (cost of building) i.e. Rs. 38 lac is to be treated as Long Term Capital Gain and Rs. 15 lac is to be treated as Short Term Capital gain . Further on Rs 38 lac, 20% is to be applied for calculating LTCG and 30% on Rs. 15 lac is to be applied for calculating short term capital gain.
For calculating Capital gain on land & building, land sale value as per circle rate was derived and indexation on cost of land was applied to calculate capital Gain. For building being depreciable asset, Sale value of entire building minus land value was Rs. 60 lac . Original cost of building constructed in 2007 is Rs. 22 lac on which depreciation till date was Rs. 15 lac & WDV of building is Rs 7 lac.
My query is whether Rs.60 lac minus Rs.22 lac (cost of building) i.e. Rs. 38 lac is to be treated as Long Term Capital Gain and Rs. 15 lac is to be treated as Short Term Capital gain . Further on Rs 38 lac, 20% is to be applied for calculating LTCG and 30% on Rs. 15 lac is to be applied for calculating short term capital gain.
24 December 2018
The entire 57 lacs capital gains on building is treated as short term capital gains. Depreciable asset only short term capital gains applicable.
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