Depreciation & cg related

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Chirag Chordia (Querist)

20 July 2012 Assets (2 Buildings) have been purchased in the FY 2000 for the purpose of business. In FY 2004 business has been discontinued and till that time dep on the assets has been claimed accordingly as per sec. 32.

However, In FY 2013 that assets have been sold.
Now question is What would be the Cost of that assets for the purpose of capital gain calculation?
Plz clarify ur view also on depreciation part? whether in the meanwhile, is it compulsory to claim even if business is discontinued? or what?

thanx in advance

Neha Popat

Neha Popat (Expert)

20 July 2012 In your case the two buildings are a part of Block of assets and selling them off gives rise to Short-term Capital Gain (since depreciable asset). No indexation benefit is available.

Further, it was possible to claim depreciation even if the company is discontinued. Note I am talking about a company assessee. A company assessee can claim depreciation even if business is discontinued, till the time the company is in existence i.e. not wound up. The following case laws support this argument.

1. COMMISSIONER OF INCOME TAX vs. KRITI RESORTS (P) LTD. (HP) (2011) 243 CTR (HP) 341 : (2011) 60 DTR 138
2. Commissioner of Income-tax v. Ganga Properties Ltd. [1993] 199 ITR 94 (Cal)
3.Commissioner of Income-tax v. Karanpura Collieries Ltd. [1993] 201 ITR 498 (Cal)

This information was for future reference. For the case in hand i.e. sale of two building the Short-term Capital Gains are to be computed as:

Sale Proceeds :XXX
Written Down Value :xxx
STCG :XXX

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