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INCOME TAX

10 May 2007

KINDLY CLEAR IT, WHETHER ANY BUILDING ON WHICH DEP. HAS BEEN CLAIMED IN PAST CAN BE CONVERTED IN STOCK IN TRADE, IF YES, WHAT ABOUT CAPITAL GAIN WHETHER CAPITAL GAIN ON CONVERSION OF DEPRECIABLE CAPITAL ASSET WILL BE TREATED AS LONGTERM OR SHORT TERM.

SUNIL AGARWAL
FAC

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2 Replies

Ankit Bhatia (163 Points)
Replied 10 May 2007

Yes this is sub to capital gains tax,and for LTCG or STCG ,period will depend on when the asset is sold

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Rajesh Itty Eapen (111 Points)
Replied 10 May 2007

hi friends......

Depreciable assets are assets owned by the tax payer and used in his business....

Whatever be the period for which a depreciable asset was held by the transferor, the capital gain arising from the transfer is always short term capital gains.....

Excess of full value of consideration over the written down value of the book of assets and expenditure in connection with the transfer is the short term capital gains.
Written down value is the cost of the asset in the year of purchase as reduced by the depreciation allowed in subsequent years.

If the full value of consideration of the transferred assets in a block of assets is less than the written down value of all the assets of that block, there will be no capital gain chargeable to tax.

there can be no transfer if the ownership in an asset remains with the same person.

regards
rajesh itty eapen