CA Final
208 Points
Joined November 2009
I am not clear with your question. But will answer with the follwoing assumptions
1. The Company is in the business of Rendering Software services.
No capital gains, it is a simple income from Business.
2. The company is not engaged in the business of software and has
a) Purchased a Software for the use in business
b) Created its own software and is now selling the software
In both the cases the Purchase Cost / Cost of building the software would have treated as Intangible asset and depreciation would have been allowed under Section 32 at a rate of 25% WDV method.
Now, if you are receiving any money towards sale of these softwares, then the amount will be reduced from the depreciation block and the tax treatment will be as follows
|
Entire Block is Sold |
Entire Block is Not Sold |
Amount Received > WDV of the Block |
Short - Term Capital gain |
Short - Term Capital gain |
Amount Received < WDV of the Block |
Short - Term Capital Loss |
The Block continues to exist and depreciation can be claimed on the balance amount at 25% |
In the above cases there will be no Indexation Benefit.
If your case is different from that of the above, can you please elaborate it.
Shiva