Capital gain on depreciable asset where the new asset is in

This query is : Resolved

b. v. siddheshware (Querist)
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02 January 2017 The ITO has disallowed the addition in new hospital building merely because the new building is in work in progress, where as all the sales proceeds of old hospital building along with own fund and as well as loans taken from bank is invested in the new hospital. The construction of new building was started prior to sale of old building.

Amol S Joglekar

Amol S Joglekar (Expert)
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03 January 2017 So what is the issue? Please specify the dates.

b. v. siddheshware

b. v. siddheshware (Querist)
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03 January 2017 doctor has started the construction of new hospital on 15-05-2013 and the old hospital was transferred on 29-10-2013, till the date of transfer, he has incurred Rs.29,11,640/- towards the construction of new hospital building by utilizing his own fundownfund

Amol S Joglekar

Amol S Joglekar (Expert)
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03 January 2017 Was the new hospital building ready for use as of 31/03/2014?
If yes, then you can claim the depreciation
If no, then ITO is contention is right.

b. v. siddheshware

b. v. siddheshware (Querist)
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03 January 2017 Total sales proceeds and bank loan is invested in new hospital, Till the 31/03/2014, the total construction was amounting Rs.78,39068/- and the sale proceeds of old hospital is Rs. 6000000/- ( sixty lacs), but as the new building is under construction , no depreciation was claimed in that year. The client is an anesthetist and there is no need of full hospital to show his work in that hospital, only one office is sufficient to work for him, and there is no need to claim the depreciation in that year.

Amol S Joglekar

Amol S Joglekar (Expert)
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03 January 2017 In order to claim the depreciation, the asset must be "put to use"
In your case, the question of whether or not the anaesthetist needs it or not is immaterial.
"The block of asset" concept requires that the new asset should be ready to use on or before 31/03/2014.

b. v. siddheshware

b. v. siddheshware (Querist)
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03 January 2017 I want to go in appeal against this order, and what steps to take while filing an appeal

Amol S Joglekar

Amol S Joglekar (Expert)
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03 January 2017 Based on the information disclosed by you so far, you have a very WEAK case for appeal. Do consult some good CA nearby to you, before investing your time in filing and servicing of the appeal.

b. v. siddheshware

b. v. siddheshware (Querist)
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03 January 2017 Thanks for the discussion and i will contact you Amol

Amol S Joglekar

Amol S Joglekar (Expert)
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03 January 2017 You are most welcome.

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