WDV Asset of Firm sold, if it is busi. inc or Capital Gain
This query is : Resolved
09 May 2009
Sold the very old assets of the firm, it comes a loss as per WDV. Can be adjusted in firm business income.
09 May 2009
It is 'short term capital gain/loss'. For details refer section 50 of the Income tax act,1961 in www.incometaxindia.gov.in
10 May 2009
agree with the expert
11 May 2009
I do not agree with this. There may be loss on the individual assets WDV, however the block of the assets may not have ceased to exit. Please check for Income tax purpose, whether the block in which the assets has been grouped is still existing or it has ceased to exits. If the block exists, there may not be any capital gain / loss. In the case if the block exits, the sale proceeds shall be reduced from the WDV of that block. However on the treatment of loss/ gain if any, I agree with BC that this would be short term as as mentioned by you it seems that the assets are depreciable and depreciation as per Income tax act is has ever been claimed on such assets.
Message likes :
1 times
11 May 2009
Sir,I clearly say,
Block of Asset: Machinery
One Machinery was sold out, So we calculate the cost less depreciation and get WDV. Which would be come under a Gain / loss.
pls, inform the right method of calculation.
Block of Asset: Machinery
One Machinery was sold out, So we calculate the cost less depreciation and get WDV. Which would be come under a Gain / loss.
pls, inform the right method of calculation.
03 August 2025
Great question! Here’s how to treat the sale of a business asset from the block of assets under Income Tax Act:
Key points:
Under Income Tax Act, assets of the same class are grouped into a block of assets.
When an asset from the block is sold, capital gain or loss is generally not computed on individual assets.
Instead, the sale consideration is deducted from the block’s Written Down Value (WDV).
Depreciation is claimed on the WDV of the block after adjusting the sale proceeds.
Two possible scenarios:
Block of assets still exists after sale:
Sale price of asset is deducted from the block’s WDV.
If sale price > WDV of the block, excess is treated as short-term capital gain under Section 50.
If sale price < WDV, no capital loss or gain arises — just reduce the block value.
Loss on individual asset is not separately allowed.
Block of assets ceases to exist (i.e., all assets sold or discarded):
If the entire block is sold or discarded, WDV is nil.
Difference between sale proceeds and WDV is treated as capital gain or loss.
Your case:
You sold one machinery from the block.
The block still exists (other assets remain).
So, sale proceeds are deducted from block WDV.
Loss or gain on individual asset does not get separately recognized.
Depreciation will be claimed on the reduced WDV of the block next year.
Summary:
Sale of asset from block → adjust sale proceeds against block WDV.
No separate capital gain/loss on individual asset unless block ceases to exist.
If sale proceeds exceed block WDV → short-term capital gain on excess.
If sale proceeds less than WDV → no loss, just reduce block WDV.
Key points:
Under Income Tax Act, assets of the same class are grouped into a block of assets.
When an asset from the block is sold, capital gain or loss is generally not computed on individual assets.
Instead, the sale consideration is deducted from the block’s Written Down Value (WDV).
Depreciation is claimed on the WDV of the block after adjusting the sale proceeds.
Two possible scenarios:
Block of assets still exists after sale:
Sale price of asset is deducted from the block’s WDV.
If sale price > WDV of the block, excess is treated as short-term capital gain under Section 50.
If sale price < WDV, no capital loss or gain arises — just reduce the block value.
Loss on individual asset is not separately allowed.
Block of assets ceases to exist (i.e., all assets sold or discarded):
If the entire block is sold or discarded, WDV is nil.
Difference between sale proceeds and WDV is treated as capital gain or loss.
Your case:
You sold one machinery from the block.
The block still exists (other assets remain).
So, sale proceeds are deducted from block WDV.
Loss or gain on individual asset does not get separately recognized.
Depreciation will be claimed on the reduced WDV of the block next year.
Summary:
Sale of asset from block → adjust sale proceeds against block WDV.
No separate capital gain/loss on individual asset unless block ceases to exist.
If sale proceeds exceed block WDV → short-term capital gain on excess.
If sale proceeds less than WDV → no loss, just reduce block WDV.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- CG Tax On residential property
- Post Office RD Interest
- Applicable TDS for Purchase of Flat from NRI
- Claiming exemption of perquisite for employee-owned car under New Tax Regime in ITR-2
- Eway bill for machinery reparing
- Under construction property in ITR
- Gift of mutual fund units to daughter
- Not able to file ITR
- Reporting of STCG on Property in ITR
- NRI ITR2 account in 2025-26 ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,.
- PF Taxable Income
- Clarification on Tax Audit Applicability and Reporting of F&O Transactions in ITR-3
- Interest credited in FY2025-2026 & TDS therein by EPFO does not reflect in AIS or Form 26AS
- 44ad eligble money lending interest
- Delisted shares sold in off market/ Rebate u/s87A
- In Exports Sales HSN details where to fill
- Opting out" of regime provided under subsection (1A) of Section 115BAC but Form 10IEA is not filed.
- Difference in tax comparison report
- Gst invoice numbering and delivery challan numbering
- Sales amount in Gstr1
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
