Deprecation + capital gain

As per section  32 for charging depreciation two condition has to be fulfilled-

1.Block must exist means there should be assets in block AND

2.Block must have positive WDV

if any of above condition not fulfilled then depreciation according to section 50 shall be calculated.

ANALYSIS OF ABOVE SECTION WITH SECTION 50

1.if block has positive WDV and has no assets in block then Short term capital loss &

2.if block has negative WDV and has no assets in block then short term capital gain.

3.if there is a assets in block and block has negative WDV then its short term capital gain as u have already recovered more what u have invested.

4.if block has a assets and having positive WDV then depreciation will be charged as it fulfills both of the condition as specified in section 32.

Logic for treating capital gain arising from transfer of depreciable assets under section 50 always as short term capital gain irrespective of its period of holding is that when we claim depreciation we take tax benefit @ of normal slab which is usually 30%.and if assets is long term so we would have charged tax @ 20% under section 112.therefore to eliminate this specifically gain or loss arising on transfer from depreciable capital assets is treated as STCG because STCG is also chargable  at normal slab.which is usually 30%

ANSWER FOR YOUR QUESTION.

1.Dep 2.1

2.short term capital gain 6 bcoz block cease to exist and have negative WDV

3.same as 3 

4.STCL 14 as block cease to exist and positive WDV

5.nothing

6.nothing

7.Dep 3

8.short term capital loss 20

ANSWER FOR YOUR QUESTION.

1.Dep 2.1

2.short term capital gain 6 bcoz block cease to exist and have negative WDV

3.same as 3 

4.STCL 14 as block cease to exist and positive WDV

5.nothing

6.nothing

7.Dep 3

8.short term capital loss 20

dear  linesh in last case   there  will not be any STCL , since the assets neither sold nor insurance claim received for it , so no transfer and 50 not attracted.

Please answer question 2 also.

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