capital gains on depreciable asset. pl

440 views 6 replies

Mohammed Waseem

30 Points Joined November 2017

plz answer the below question

Q. Sale of any capital asset forming part of a Block of assets, in respect of which depreciation has been
allowed-
a. Shall always give rise to long term capital gains, if the asset is actually used for business.
b. Shall always give rise to short term capital gains.
c. May give rise to either long term or short term capital gains, depending on the period for which such
capital assets were actually used for business.
d. May give rise to short term capital gains but never long term capital gains.

Replies (6)

Balaji Ramalingam

Student - CA Final

285 Points Joined October 2015

Option (d) is the answer

SHIVANI KUDTARKAR

512 Points Joined October 2018

answe (b)

Balaji Ramalingam

Student - CA Final

285 Points Joined October 2015

what if the block is not exhausted after the sale with respect to, number of assets in that block as well as WDV??

Guest

Answer is option (b).

Originally posted by : Balaji Ramalingam
	what if the block is not exhausted after the sale with respect to, number of assets in that block as well as WDV??

If the balance is still lying after reducing sale price from the block value, then the balance is depreciated as usual.

Balaji Ramalingam

Student - CA Final

285 Points Joined October 2015

Then where does the question of Short term capital gain arise if the block exists? Short term capital gain will arise only if the entire asset in that black is sold or the sale value exceeds the sum of opening WDV and additions during the year otherwise, sale of assets will reduce your block value thereby reducing depreciation claim. Hence sale of a depreciable asset need not always result in Short term capital gain.

Guest

Originally posted by : Balaji Ramalingam
	Then where does the question of Short term capital gain arise if the block exists? Short term capital gain will arise only if the entire asset in that black is sold or the sale value exceeds the sum of opening WDV and additions during the year otherwise, sale of assets will reduce your block value thereby reducing depreciation claim. Hence sale of a depreciable asset need not always result in Short term capital gain.

Yeah, correct. Well done. Answer is (d).