Depreciation problem

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C.A. B.Com(H)

70 Points Posted on 31 October 2009

Please solve this problem

Suppose a land is purchased on 01/01/2000 for Rs. 10 Lacs. On 01/102004 building is constructed on this land after spending rs. 5 lacs.

Ques 1 Now in books , Whether land & building to be shown separately at rs. 10 lacs as land and building at rs. 5 lacs resp.

ques. 2 whether dep @ 10% will be allowed on 15 lacs (incl. land ) or on rs. 5 lacs.

Ques.3 If dep. is allowed on rs. 15 lacs, Suppose land is sold on 31/03/2006 for rs. 20 lacs then how will capital gain be calculated.

Whether STCG & LTCG be calculated separately. if yes, How?

Replies (3)

Guest

Posted on 31 October 2009

Ans for 1.you have both the option.U can show seprately as well as individually.

Ans for 2. Depreaciation is not allowed on land.Calculate depreciation on building only i.e on 5 lacs only(if used for business purpose)

triumph-CMA

Chartered Accountant

471 Points Posted on 31 October 2009

capital gain on land is LTCG and on Building it is stcg

triumph-CMA

Chartered Accountant

471 Points Posted on 31 October 2009

Where land and building are sold and land is long term but the building is a short term capital asset, either because it is newly constructed or it is so treated by virtue of Sec.50, the sale consideration can be split up so as to compute long term capital gains with reference to land separately and to avail in such computation the benefit of indexation. In respect of building, short term capital gain / loss can be computed separately

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