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amit kumar (Querist)

07 July 2008 I want to know the answer for the following question

Suppose 1 machinery amounting to rs. 100000 has been purchased on 01.01.2002 and the W.D.V of the machinery on 31.03.2008 is Rs. 40000 and now this machinery is being sold for Rs. 150000.

Someone says that Rs. 50000 is a capital profit and Rs. 60000 is revenue profit whereas sopmeone contends that Rs. 110000 is a revenue profit . the clarification given by them is that nothing has beemn specified in As-10 that there is capital profit above the historical cost . however one of the expert said that it has also been held by the institute in the journal of june 2000.(copy of journal is not available to me so i am not able to verify the same)

Please reply the same from view points of accounts i.e treatment to be done in the books and dont explain me the GYAN of income tax act and also i request u to give proper backing to ur answer.

MANAS ROUT

MANAS ROUT (Expert)

07 July 2008 11000 is the profit from sale of machinery and this u have to shown differently in ur p & l account and as per incomet tax concern if the block of asset is nil or the sale value is more then it is short term capital gain other wise directly reduce from the wdv value and charge depreciation on the balance accordingly.