Sec 50 of the income tax act

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 August 2011 My view is that loss on sale of depreciable assets is not deemed to be capital loss arising from transfer of short term capital asset.

My reasons for this are:

It is deeming provision and hence limited application.

It applies only when excess of consideration and hence it applies only when there is profit on sale of Depreciable asset.

When there is shortfall of consideration and thereby loss, the section is silent and provisions being deeming should apply only when there is excess.

I will be obliged if membres throw some light on the issue.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

04 August 2011 It is true that section 50(1) applies only in the case of any "excess" realised subject to the condition that the block is not vacated.

But if you carefully read the sub section (2) of Section 50, which is applicable when the block does not exist, you will find that in such situation when the sales consideration is less than the book value,
it results into short term capital loss.
.
In this situation the phrase " income received or accruing as a result of such transfer shall be deemed to be the capital gains arising..... plays its role.
.
The word "income" includes "losses" also
and as such it can rightly be said that section 50(2) talks about both STCG and STCL.

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