Working of Capital Gain
This query is : Resolved
17 July 2008
My Client sold a shop building in the year 2001 which was earlier used for business & dep. was claimed accordingly. The gain of Rs 50000 from sale of shop was adjusted against the cost of rs 3 Lacs paid for new commercial property purchased in the same year. The new property has never been used in business & no depreciation has been charged till date. Now the new asset has been sold on 30.06.2008 & a surplus of Rs. 5 lacs has been generated. Plz tell me whether the same is Short Term or Long Term ?
S.Srinivasaraghavan
(Expert)
17 July 2008
gain from Sale of new property is Long term capital gain
17 July 2008
Mr.Srinivasaraghavan
The gain from sale of First Property was adjusted against the second one as an item in the same block of asset. Will it not effect the tax implication while calculating the gain on same property. I think the block adjustment indicates that the gain is Short Term U/s 50 of Income Tax Act.
The gain from sale of First Property was adjusted against the second one as an item in the same block of asset. Will it not effect the tax implication while calculating the gain on same property. I think the block adjustment indicates that the gain is Short Term U/s 50 of Income Tax Act.
S.Srinivasaraghavan
(Expert)
17 July 2008
You are saying that the property was never used in business
17 July 2008
Originally the property was purchased as an item of the same block but could not be used on account of closure of that unit & also no depreciation has been charged.
17 July 2008
Originally the property was purchased as an item of the same block but could not be used on account of closure of that unit & also no depreciation has been charged.
S.Srinivasaraghavan
(Expert)
18 July 2008
It is clear that the property, though merged with the block, remained without depreciation charge ever since 2001 (the year of acquisition of new property). The block was also not further depreciated. Therefore I am of the view the gain on its sale is only LT capital gain.
18 July 2008
18 July 2008
Mr.Srinivasaraghavan,
Further to my query i want to add that there is a deeming provision U/s 32 of income tax act that in a case dep. is not charged than it shall be deemed as presumed that such a depreciation charged and allowed hence under the circumstances shall i be able to convince & satisfy my version of treating the same as ST Gain
Further to my query i want to add that there is a deeming provision U/s 32 of income tax act that in a case dep. is not charged than it shall be deemed as presumed that such a depreciation charged and allowed hence under the circumstances shall i be able to convince & satisfy my version of treating the same as ST Gain
Dhirajlal Rambhia
(Expert)
18 June 2023
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