ca final
51 Points
Joined June 2016
Assume Sale Consideration for sale of depreciable Capital Assets is Rs. 100 and Book value(i.e. WDV as per companies act) as per books of account is Rs. 75 then your profit and loss as per companies act must be including the profit of Rs. 25 on sale of above(i.e. 100-75) . Now while calculating for profit ,if any, arises on this sale we need to follow the section 50 and as you mentioned there is no profit as per section 50. Now the only issue remains is how to disclose or report this in ITR.
Reporting should be as follows:-
1. Under Schedule Profit & Loss -
under heading of Other Income - under sub heading heading Profit on sale of FIxed Assets enter Rs. 25
2. Under Schedule BP-
under heading "Income/ receipts credited to profit and loss account
considered under other heads of income/chargeable
u/s 115BBF/ chargeable u/s 115BBG" -
then under sub heading Capital Gain enter Rs. 25
3. under Schedule DPM- Enter Rs. 100 under "Consideration or other realization during the
previous year " of the relevant block of assets.
The Reporting should as per above 3 points only.
People get confused here because they think they have to establish one to one relation between amounts, what amount is being excluded under schedule BP on account of taxing it under different head has to be reported under the respective head in our case is capital gain head, otherwise there will be processing error by CPC.
If we have excluded any income from schedule BP on account of taxing it under different head then under such different head this income can of same ,more or less amount.