Sale of assets

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Vasant Sohoni (Querist)

05 November 2011 A company has purchased Industrial Gala for Rs 44L in 2007.
Company has claimed depreciation till now.
From 2008 Company was functioning as 100% EOU so no Income tax has been paid.
Now the Company has no more export orders.
Also The 100% EOU Tax benifits are no longer available. As there is no revenue the company has no Income tax liability.
Company also has incurred loss in the last year. As the company does not see other export opportunities, now wish to Apply for de-bonding from 100% EOU status. Company also wishes to sell the said Gala, market price of which is over Rs. 95L.

How should the earnings from Sale of Assets be treated? Can the Profit from the sale of asset be set off against the loss from business activities?

How would the capital Gains tax be applied?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

06 November 2011 Only current Business loss can be set off against the STCG arising on sale of depreciable assets.

Business Loss of earlier years can be set off against Business Income of the current year.

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