adjustment of profit on sale of fixed assets credited to profit anf loss in income tax return

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Quick Summary
Where book profit on sale of a fixed asset differs from tax treatment under the Income Tax Act, the adjustment is generally made in Schedule BP by reducing income credited to the Profit and Loss Account and reporting the transaction in the relevant depreciation or capital gains schedules, as applicable.

Hi Ankit and Ganesh, Unfortunately Not found any appropriate solution..

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. 

Qasim

Section 115BBF pertains to Royalty from foreign associate company. 115BBG relates to sale of carbon credits.

Then how can we show gain on sale of fixed assets as per Profit and loss at the place as suggested by you?

Section 115BBF - The tax payable is the sum of 10% of the royalty income and the tax that would be applicable if the total income were reduced by the royalty income.
No deductions for expenditures or allowances are allowed in computing the taxable income from patent royalties.
The eligible assessee can choose the tax treatment for patent income by following prescribed procedures before the specified due date.
"Developed" requires at least 75% of the expenditure for the invention to be incurred.

sir please reply problem of rohit 

any solutioncome

 

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