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CA Saurabh Shukla (Querist)
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07 September 2012 Profit on Sale of FA in Books of A/cs treatment in I Tax, when no profit as per Income tax rule of Block Asset

We have 5 trucks in company. In current year we sold 3 trucks and purchse 2 new trucks.

We have calculated dep. and profit on sale of truck as per companies act.

We have calculated dep. as per Income Tax also, but there is no Profit in Income tax as block is not get negative after reducing sale value and still there is assets in that block.

So, My quiry is how I adjust profit on sale of fixed asset in My Return. So, that no tax will payable on profit on sale of FA.

Pls. give Sec Reference also.

CA. Vikash Dwivedi

CA. Vikash Dwivedi (Expert)
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07 September 2012 is this a question or a challange?

CA Ayush Agarwal

CA Ayush Agarwal (Expert)
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07 September 2012 Yes, Is This Question in Expert Section or a Challenge. ?

CA Saurabh Shukla

CA Saurabh Shukla (Querist)
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07 September 2012 Dear Experts,

This is Question only.

Please help if any has answer.

CA Saurabh Shukla

CA Saurabh Shukla (Querist)
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07 September 2012 If any has answer please reply, don't comment otherwise.

If you accept, this is challenge also, what is problem in that.

CA Ayush Agarwal

CA Ayush Agarwal (Expert)
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07 September 2012 Since No Profit is Coming as Per Income Tax Block System.

Books as Per Income Tax is Different as Compare to Companies Act.
Then Where the Problem is?

Your Answer Lies in Your Question Itself,
Either Your Framing of Question is Wrong, or Your Concepts are Not Clear.

Effect as Far as Income Tax is Concerned:-

1> MAT u/s 115JB can Arise

Effect as Far as Books is Concerned:-

1> Deferred Tax Liablity Arise as Per AS 22 Issued by ICAI.

Regards,
CA Ayush Agrawal

CA Saurabh Shukla

CA Saurabh Shukla (Querist)
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07 September 2012 Dear Ayush,

You are not understand. When we prepared Books of A/cs as per company Act, profit is Rs. XXX amt including 700,000 of profit on sale of Fixed asset.

When we put it in Income tax Return profit include amt. of profit on sale of Fixed asset. But when we did calculation as per Income tax no profit as - 1) Block is not get negative and 2) still in block there is asset.

So, it is not justified to pay tax on profit on sale of FA.

CA Saurabh Shukla

CA Saurabh Shukla (Querist)
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07 September 2012 So, Query is still open.

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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07 September 2012 Sir, saurabh shukla the profit on sale of FA is adjusted in Statement of total income. I.e first you have to fill Profit and loss account as per your books. In shedule BP fill the profit on sale of FA at the column named "Any exempted income" now you problem will be solve.

OM SAI SRI SAI JAI JAI SAI

Aditya Maheshwari

Aditya Maheshwari (Expert)
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07 September 2012 Since this income is to be considered under other heads of income in Income tax it can be shown under 3) Income/ receipts credited to profit and loss account considered under other heads of income

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Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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08 September 2012 Mr. Aditya Maheshwari sir, Profit on sale of Fixed assets which are depreciating assets doesn't consider as income under income tax act still the block of asset goes to Nil or negative balance and then it will also consider as short term capital gain or loss. So here now no question of income/profit on sale of FA taxable for income tax purpose so doesn't consider for Other income.

OM SAI SRI SAI JAI JAI SAI

CA Ayush Agarwal

CA Ayush Agarwal (Expert)
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08 September 2012 Yes, It Can Be Shown Under Income Treated Under Other Head of Income in Income Tax return

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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08 September 2012 Profit on sale of Fixed assets not treated as income still the block of asset goes to ZERO or NEGATIVE as per income tax then how it will be treat as income from other sources. Please clarify me.

OM SAI SRI SAI JAI JAI SAI

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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08 September 2012 Profit on sale of Fixed assets already decreases the WDV of block of assets. I.e the profit has been adjusted in the balance value of such block assets as per Income tax.

OM SAI SRI SAI JAI JAI SAI

Aditya Maheshwari

Aditya Maheshwari (Expert)
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08 September 2012 That is exactly my point here that the same though is an income from point of view of Companies act the same is not liable for taxation in view of provisions of section 50 which is under the head capital gains and hence the same is liable for taxation under head other than from income from business. It is not exempt income under any of the section 10 of the act.

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