Loss on sale of assets

asset purchased in 2007.and sold for 5 lacs and there is loss on sale of asset 2 lacs in books wdv as per companies act is 5lacs.as per income tax act, in the block of asset I showed sale of asset 5 lacs .what is treatment of this in computation of income ?
Replies (7)

Kindly restate the details properly. Unable to understand your query. How many assets are there? Did you have more than 1 asset in the given block? What kind of asset is it? As per IT Act, and as per Companies Act, what rate has been considered? Please disclose all the facts 

Thank,there are still other assets in the block.there is building ,cars and furniture.in income tax I used rates of depreciation as 15% and in companies act I have taken useful life.does loss on asset is to be added in computation ?

@ Poonam:

Which asset have you sold? Because the assets that you have mentioned are all from different blocks and the asset that you have sold? Are there any other asset apart from that? 

If the block is empty then loss will be stcl and will be chargeable under Capital gains. There is no question of adding. Stcl is subtracted by virtue of sec 71 I.e inter head adjustment. 

I have sold plant and machinery and my block is not empty.I have shown loss on sale of assets in profit and loss.there is no stcl.do I need to add back in profit while calculating profit from business and profession .pls tell in both cases if asssesse is individual or company

Correct me if I m wrong?

It means you still have P&M still in your block.In both cases i.e. individual as well as company, situation won't change.

In both cases, loss on sale of asset shown in p&l will be added back to arrive at profit from business and profession. The loss on sale of asset in P&L will be as per Companies Act and not as per IT act and hence that would anyways be added back. 

Only when block is empty and Balance is positive I.e. (Opening WDV + Purchases - Sold), then only stcl will arise. This calculations are to be done separately and hence If and only if block is empty And balance is positive then there will be stcl. If balance is positive and block is not empty then only claim the depreciation. If balance is negative irrespective of whether block is empty or not, there is stcg

All effects needs to be shown in your computation. Stcg/stcl will be part of capital gains and depreciation will form part of profits from business and profession. 

Needless to say depreciation as companies act will be added back and depreciation as per it act, if any will be subtracted

Thanks for clarifying.
deferred tax calculated on diff of dep on companies and dep on income tax .....or it is calculated as opening wdv of co and IT less closing wdv of co and IT .in case of sale of assets and written off assets there is difference in two?pls any one clarify which is suitable

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