Stcg on sale of depreciable asset used for sec 44ad

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This discussion clarifies the tax treatment for the sale of depreciable assets used in a business under Section 44AD. Income from selling such capital goods is considered Short Term Capital Gains (STCG) and is taxed under the Capital Gains head, not as part of the turnover under Section 44AD. The STCG should be reported in the Capital Gains schedule of your ITR-3.

Jagadeeswar

Jagadeeswar (Querist)

29 December 2020 Can anyone explain the treatment on sale if depreciable asset (p&m) and stcg arises
Where the asset is used in business and claiming sec 44ad
What is the treatment and how it should be shown in itr 3 and in which schedule it has to be shown?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

30 December 2020 Income from the sale of capital goods would not form part of turnover under Sec. 44AD as the same would be chargeable to tax under the head Capital Gains. when the asset is depreciable Short Term Capital Gain would be chargeable on the sale of the capital asset.

Jagadeeswar

Jagadeeswar (Querist)

30 December 2020 Thank you sir
Can u please also explain how stcg should be shown in itr 3 (IE., under which schedule

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

30 December 2020 Show it in capital gains schedule.

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