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capital gain

Tax queries 687 views 4 replies

profit or loss on sale of fixed assets of a company is treated as capital gain or loss

thanks in advance

Replies (4)

well as per AS 10...profit or loss on sale of fixed asset is dr. or cr. to p nd l a/c......so treatment should be according to that only..

HI DEAR,

 

AS PER INCOME TAX ACT, ASSESSEE HAVING DEPRECIABLE FIXED ASSETS IN BUSINESS HAS TO FOLLOW BLOCK SYSTEM AS EXPLAINED U/S 32. AS PER THE BLOCK CONCEPT, EACH FIXED ASSET HAS  TO BE CLASSIFIED IN RESPECTIVE BLOCKS. A BLOCK IS A GROUP OF FIXED ASSETS FOR WHICH THE SAME RATE OF DEPRECIATION HAS BEEN SPECIFIED UNDER INCOME TAX ACT.

SALE VALUE OF ANY FIXED ASSET SOLD WHICH BELONGS TO A PARTICULAR BLOCK HAS TO BE REDUCED FROM THE WDV OF BLOCK ITSELF AND THERE IS NO CAPITAL GAIN OR LOSS. 

 

ONLY IN THE CASE, WHEN THE BLOCK IS EMPTY AND NO ASSETS IS REMAINING IN THE PARTICULAR BLOCK, THEN THE TRANSACTION WOULD BE RESULTED IN CAPITAL GAIN/LOSS.

 

 

REGARDS,

 

MANOJ

i agree...

It is capital gain or loss.  For depreciable asset, it is Section 50.  Please note that CG or CL will arise only if the depreciaton block is reduced to nil. For assets like land, it is normal provisions of CG i.e. u/s 45.


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