Capital gain on property

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ASHFAQUE A. SHAIKH (Querist)
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11 February 2012 Dear All,
Query:
#A shop1 premises in Mumbai a p'ship firm used for business for 4 years Purchased on
june-01, @ Rs.617387/- used for business upto 31-3-2006
#dep. claimed @10%, WDV as on 31.3.06 is Rs.364560/-
#Another Property in diff premises for Rs.716372/- in January - 2006.
#No depreciation claimed from beginning
# from 1-4-06 both the above properties are on rent & 30% deduction u/s 24(a) claimed.
# Shop1 sold in the yr 11-12 for Rs.970000/-(oct-11).
whether excess received of Rs.605439/- over WDV of Rs.364560/-be taxed under "Capital Gain" or will it be considered under " Block Of Assets".

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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11 February 2012 In my view, on the shop purchased in January 2006 , since no depreciation has been claimed, it can not be said that Shop 2 is forming part of the block of asset alongwith Shop-1 on which depreciation had been claimed in earlier years.
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Shop No 2 can be said to be a Non-Depreciable asset on the basis of facts of the case. Section 50, at least can not be applied on this, had it been sold in the given situation.
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This lead us to the result that as Shop No 2 is not in the block, the capital gain of Rs 605439/ is short term capital gain, as a result of the exhaustion of the block- by virtue of Section 50.
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The resulting capital gain is thus STCG, but in exemption sections of capital gains,
exemption may be claimed by investing in appropriate asset.
.

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