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Loss on sale of block of asset

Akshita Khiweshara (article) (39 Points)

27 September 2011

HI...

I have a query relating to the treatment of loss on sale of asset.

The facts are:

A company sold its leasehold improvements on 30 September. And immediatey the next day it purchased new leasehold improvements. My query is how the loss or gain of capital asset arising on account of such sale will be treated?

Whether it will be taxed as short term capital gain or loss and

How the WDV of that particular block of asset be calculated?

Pls reply.

Thanks in advance.

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11 Replies

Jayesh (Internal Auditor) (214 Points)
Replied 27 September 2011

it is done as follows:

Opening WDV --- XX

Add: Additions -- XX

Less: deduction/sale --XX

Balance would be +/-

If it is positive ---charge depreciation or else it would be treated as shoert term capital loss.

1 Like

vikas Agarwal (Article & Ca Final Student) (125 Points)
Replied 27 September 2011

I Agree With Above

@ CA. $ahar$h @ (Student) (338 Points)
Replied 27 September 2011

As per section 43(6), giving the method of finding written down value of depricable block of assets, assets acquired comes prior to the moneys receivable coz of sale.so

First we will take WDV on 1.4.** -------

+ lease hold assets acquired during the year -----

-Sale consideration during the year i.e 30 sept ------

WDV as on 31.3 -------

Akshita Khiweshara (article) (39 Points)
Replied 27 September 2011

Thanks Saharsh...

Sorry if I spelled your name wrongly. But wat if the block of asset is sold on 30 November and immediately on the next day the new asset is acquired.. My question is as the block of asset does not exist for that particular date, will it amount to short term capital loss?

SANYAM ARORA (“It's hard to beat a person who never gi) (20173 Points)
Replied 27 September 2011

Originally posted by : Jayesh
	it is done as follows: Opening WDV --- XX Add: Additions -- XX Less: deduction/sale --XX Balance would be +/- If it is positive ---charge depreciation or else it would be treated as shoert term capital loss.

CA ADITYA SHARMA (CA IN PRACTICE ) (16719 Points)
Replied 27 September 2011

Originally posted by : Jayesh
	it is done as follows: Opening WDV --- XX Add: Additions -- XX Less: deduction/sale --XX Balance would be +/- If it is positive ---charge depreciation or else it would be treated as shoert term capital loss.

CA PRAVEEN SINGH (MANAGER ACCOUNTS) (2277 Points)
Replied 27 September 2011

it is done as follows:

Opening WDV --- XX

Add: Additions -- XX

Less: deduction/sale --XX

Balance would be +/-

If it is positive ---charge depreciation or else it would be treated as shoert term capital loss.

ankur bansal (CA Final) (student) (129 Points)
Replied 27 September 2011

it is done as follows: Opening WDV --- XX Add: Additions -- XX Less: deduction/sale -- XX Balance would be +/- If it is positive ---charge depreciation or else it would be treated as shoert term capital loss.

Nabeel (CA) (3288 Points)
Replied 28 September 2011

Originally posted by : Jayesh
	it is done as follows: Opening WDV --- XX Add: Additions -- XX Less: deduction/sale --XX Balance would be +/- If it is positive ---charge depreciation or else it would be treated as shoert term capital loss.

Ramanuj (Accountant.) (834 Points)
Replied 28 September 2011

it is done as follows:

Opening WDV --- XX

Add: Additions -- XX

Less: deduction/sale --XX

Balance would be +/-

If it is positive ---charge depreciation or else it would be treated as shoert term capital loss.

@ CA. $ahar$h @ (Student) (338 Points)
Replied 28 September 2011

Hi Aksh*ta,

actually yaar the funda is this.....
First of all add all the assets purchased during the whole year on the opening WDV i.e all assets purchased till 31st of march....then subtract all the assets sold during the year from the total of (Opening WDV+assets purchased during whole year).....If the balance turns to zero, the block of assets will cease to exist from that date and if it becomes negative then the negative portion is your STCG as per section 50.....and you spelled the name perfectly :)