Insurance claim received on total loss of car
This query is : Resolved
31 December 2015
Sir,
My one client has received insurance compensation of Rs. 262000/- on total loss of car. Wdv of car Rs. 240000/- as on 31/03/2014. This car is used totally for personal use. Excess of Rs. 22000/- received is taxable or not as short term capital gain on depreciable assets? Depreciation was not claimed by the assessee as business expenditure in earlier years because assets is fully for personal use. Every year assessee debits depreciation in capital a/c.
Please reply at your earliest.
My one client has received insurance compensation of Rs. 262000/- on total loss of car. Wdv of car Rs. 240000/- as on 31/03/2014. This car is used totally for personal use. Excess of Rs. 22000/- received is taxable or not as short term capital gain on depreciable assets? Depreciation was not claimed by the assessee as business expenditure in earlier years because assets is fully for personal use. Every year assessee debits depreciation in capital a/c.
Please reply at your earliest.
31 December 2015
No short term capital gain arise as no depreciation claimed on this asset. As the asset is used for personal use it will not fall under capital asset definition. So the gain of Rs. 22000 is not taxable.
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