Capital Gains on Sale of business asset

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This query is : Resolved

niki (Querist)

27 April 2009 An assessee (a partnership firm) owned only one shop premises, which was sold during the year for Rs. 4 lacs. The shop was used for purpose of business. However, the assessee has not claimed any depreciation on the said shop in the earlier years. The said shop was purchased in F. Y. 2001 – 02 for a cost of Rs. 52,000/-. The market value of the said shop on date of sale as assessed by stamp valuation officer is Rs. 6.24 lacs.

a) Does the sale of such shop premises attract capital gains? STCG or LTCG?

b) Is section 50C attracted?

c) In case the assessee purchases another shop premises during the year, will the sale of the original shop still be liable to capital gains?

Thnx & Regards,
Niki

chetan soni

chetan soni (Expert)

27 April 2009 Yes, sale of shop will attract the provision of capital gains. It will be considered as LTCG.

Again yes, provision of section 50C will attract.

In the cost of new shop is more than the amount capital gains then he will not be liable for capital gains. Otherwise yes.

taxindiaconnect

taxindiaconnect (Expert)

27 April 2009 I agree with Chetan as the assets is not a depreciable assets and is held for more then 3 year before disposal, the gain on this will be LTCG and section 50 C and 54E apply.

CA Nitin Wadhwani

CA Nitin Wadhwani (Expert)

28 April 2009 The computation of the capital gains will be done as per block of assets method since shop is a depreciable asset even if the assessee has not claimed any depreciation it will be assumed that he has claimed the depreciation since it is mandatory as per Sec.32 and Sec.50C is applicable.

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