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.
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.
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.
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
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.
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.
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.
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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