MR. X OWNS A HOSPITAL BUILDING ON WHICH DEPRECIATION WAS BEING CLAIMED AT 5% TILL A.Y 2004-05. BUT FROM A.Y 2004-05 TILL A.Y 2012-13 NO DEPRECIATION HAS BEEN CLAIMED ON THE HOSPITAL BUILDING. AND THE WDV OF THE HOSPITAL BUILDING AS ON 31.03.12 IS RS. 80000.
MR. X IS SELLING THE HOSPITAL BUILDING. WHETHER THE HOSPITAL BUILDING WILL BE CONSIDERED AS A SHORT TERM ASSET OR A LONG TERM ASSET U/S 50.
REGARDS,
DEVENDRA KULKARNI
dear devandra,
once depreciation is claimed against any asset it comes under the perview of sec 50 of the income tax act. and hence STCG will arise.
refer sec 50.
cheers
ganesh agarwala
IN THE ABOVE SITUATION WHAT WILL BE THE ACQUISITION COST?
WHETHER IT WILL BE THE COST OF COSTRUCTION OF THE HOSPITAL BUILDING OR THE WDV AS ON 31.03.12.
WDV as on 31-03-2012.
Capital gains would be attracted only if the entire block is transfered or the WDV of block is less than the selling price.
and also you ll have to provide Depn for AY 05-06 to AY 10-11, coz in I.Tax Act Depreciation has to be compusorily claimed, though you havent claimed it in your books it ll be deemed to have been claimed as far as I.Tax Act goes so you COA will be WDV as on 31.3.2004 - (Dep for 7 yrs) and yes it will be a STCG u/s 50
Capital gain arising on account of depreciable asset will always be taxed as short term capital gain. Hospital building is a depreciable asset, hence, capital gain will be computed as follows :
Opening WDV
(+) Value of new building of same class purchased during the year
(-) Sale value
If, after sale if any asset is remaining in the block and still there is WDV, then no capital gain will arise you can claim depreciation on the balance WDV.
In case of depreciable asset capital gain will arise only in following two situations :
(1) When there is no asset in the block
(2) When there is no WDV in the block.
If
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