Sale of office by Pvt Ltd company

Save Share

This query is : Resolved

Quick Summary

A private limited company is selling an office it purchased in 2009 for Rs. 3 crores for Rs. 9 crores. The discussion covers how to record this sale in the company's accounts and its tax implications. The primary consideration is whether the profit will be treated as long-term or short-term capital gains, depending on factors like depreciation claims and the nature of the asset.

Suraj

Suraj (Querist)
Follow

01 July 2023 Dear Sir / Madam,

A Pvt Ltd owns an office purchased in 2009 for Rs. 3 crores. It is shown in balance sheet as an asset. Now A Pvt ltd is planning to sell its office for Rs. 9 crores. How show this entire sale in books of accounts and what would be the tax implication?

Kindly guide,
Regards
Suraj

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
Follow

01 July 2023 Whether any depreciation was claimed during these years, or any structure made over it?

Message likes : 1 times

Suraj

Suraj (Querist)
Follow

01 July 2023 Sir, No depreciation was claimed.
What if depreciation was claimed by any assessee on office premises?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
Follow

01 July 2023 Declare the income under head Long Term Capital Gain, with indexation.
In second case the gain would be ST in nature, if used under any block of assets.

Message likes : 1 times

Suraj

Suraj (Querist)
Follow

02 July 2023 Thank you Rambhia Sir.
You mean to say, In second case it will treated as business income of the company that would be routed through P&L and taxed as per company tax slab rates???

Message likes : 1 times

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
Follow

02 July 2023 Not exactly. It is disputable issue. As per act it is considered as short term cap gain. But here it being plain land depreciation is not allowed and the asset is considered as investment only, so long term cap gain.

Message likes : 1 times

Suraj

Suraj (Querist)
Follow

02 July 2023 Okkk Thank you Sir.....

Message likes : 1 times

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
Follow

02 July 2023 You are welcome.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now