Dep as per it when the fixed asset is coveres under a loan

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Querist : Anonymous

Querist : Anonymous (Querist)

20 April 2012 Sir
if a fixed asset is covered under a loan then the sale value deducted from the op wdv+purchase is what
1.sale price-loan(as being no more loan)
or
2.SalesPrice
for calculation of dep as per IT act

CA Kishore Tallam

CA Kishore Tallam (Expert)
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20 April 2012 For calculation of depreciation, the following formula will be applied.
Ope WDV + Purchases - Receipts from sale of fixed assets. If there is any balance after this formula and also assets exists in block, depreciation is provided.

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CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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20 April 2012 As the expert suggests, you have to deduct the sale value of any asset only when it is actually being sold.
.
While providing depreciation you need not to consider loan outstanding against the asset.
.
Repayment of loan does not increases or decreases the value of asset hence at the time of sale of such asset proposition no 2. i.e. Sale Price is correct.

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Querist : Anonymous

Querist : Anonymous (Querist)

20 April 2012 But Sir if the loan is transfered to the concerned person & balance is recovered from party.suppose the op wdv is 30(as aginst a remaining loan of 10,the sale price is 25,so as per accounts their is profit of Rs 5,but as the block is not cease to exist so no stcg,so the sale value deducted from op+purchase is 25 or 35(25+loan of 10)

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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20 April 2012 1. When Block does not Cease to exist ?
The block is said as not ceased to exist only when there is/are other assets in the block.
.
2. In case Op WDV 30Lac represents the only asset which is being sold , then block will be told as vacant or cease to exist.
.
3. If 25.00 Lac is Received By Cash/Cheque
and further Rs 10.00 lac loan will be met by the Buyer then Purchase Consideration for him will be Rs 35.00 lac.
In such a case you have to deduct 35.00 lac
.
4. Rs 5.00 lac is STCG- whether or not any asset exists in the block.
.
5. In case the Total consideration is received as rs 25.00 lac divided in two parts of cash & Loan- and there exist any asset in the block, on the WDV of 5.00 lac depreciation has to be provided.
.

6. When there is no asset in the block
and you receive 25lac, the result will be STCL(Loss) of Rs. 5.00lac.

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