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Capital gain,accounting treatment

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Querist

Student CA IPC / IPCC

56 Points Posted on 03 February 2016

Arun Student CA IPC / IPCC 1. Whether a depreciable asset (Buillding and Machinery)sold for profit gives rise to Short term Capital Gain or Long Term. As Sec 2(42) says any capital asset held for more than 36 months is a long term capital asset. So whether the Gain arising out of it is Short term or long term 2. Opening Wdv is 18 lakhs and the money recieved on sale of asset is 20 lakhs. So while calculating depreciation as per income tax act the closing wdv becomes negative which is treated as short term gain,But still if physically other buildings are available how to claim depreciaiton for them? 3. Book Treatment during Sale of fixed Assets- Calculated the Book Profit on sale of this Asset. So in schedule of fixed asset .in the sale/deletions column which figure we should put on whether the money actually recieved or the opening wdv on the FY in which it is sold ?

Replies (1)

mohammad rasool baig

Management Consultant

997 Points Posted on 03 February 2016

Arun....!

1. Depriciable asset sold the gain or loss will be short term, because it is covered by exceptions for the >36 months.

2. In income tax we have to be considered the block (Group of similar assets) but not the individual assets, so you can claim depriciation on other assets by deducting the 2 lakhs if the block contains other assets.

3. In books of accounts , by sale of fixed assets we have deduct the gross value from the assets schedule and Depriciation from the Depriciation reserve and no where we need to consider the sales value.