Capital gain

No capital gain over insurance claim of destroyed property.

The amount is credited to block of asset.

Capital Gain arises in the year of receipt of insurance claim under sec 45 of the Income Tax Act, 1961.

capital gains tax will arise as per section 45(1A)

Here the property is Capital Asset therefore capital gain will be computed as per section 45(1A). If it would have been Business assets then it would have been adjusted through Block of Assets.

The Calculation would be as follows;

Sale Consideration= Insurance claim
COA = Your Purchase Price/FMV/SDV (as the case may be)
Period of Holding (i.e. For Calculation of whether the Property was Short term or Long Term) shall be FROM Date Of Purchase/Const.--to--> Date of Destruction.

IMPORTANT NOTE-
Capital Gain would be Calculated in the year in which INSURANCE MONEY IS RECEIVED. Although, Capital Gain would be Calculated in the Year of DESTRUCTION.

After Knowing all this; Just Simply apply this formula-

Sale Consideration -( COA ) - (Expense etc made for getting Insurance money) = Capital Gain

Calculate in the year of DESTRUCTION but pay Capital Gain in the YEAR OF RECEIPT OF INSURANCE MONEY.

Thanks. Be Helpful to One Another!

Amazing @ Nitesh Bind sir you make every thread so useful and informative in which you reply.

Thanks you very much Manish. ! But I believe Every expert here is just amazing. 🙏🙂

if the block of assets ceases to exist and the insurance amount received on destruction of property is greater than the opening wdv , then the resultant amount would be treated as capital gains even if the asset destructed is of fixed asset .
inter-alia
if the insurance premium is less than the wdv ➕ cost of any new asset purchased during the p. y., then it'll be adjusted with the resultant value in essence wdv ➕ cost of any new asset purchased and depreciation will be allowed as per the allowed rate of depreciation