Loss on sale of car

8172 views 8 replies

A car which was purchased 4 years ago was sold during the year at a loss & prior to that another car was purchased.

(i) Is the loss on sale allowable as business expenditure?

(ii) If not then what is its tax implication?

Regards

Replies (8)

loss on sale of car as per accounts is a revenue loss and as per Income tax act it is a capital loss 

Short term capital gains on transfer of depreciable assets computed  u/s. 50(2) and it is computed when there is no assest in the block or the value of block reduced to nil.


 

U hav to confirm whether d old car wich u hv sold was used in business and whether you had already added the asset in the block of assets and charge dep. on it.. If u hd done so, then you shall deduct the sale price of such asset from the block and calculate WDV as per Sec 43(6) threon.. Losses will be automatically adjust..

If car was used as personal, then thre will be not tax implication since it comes under personal movable effect.

Yes the car was used for business purpose. Is the loss allowable as business expenditure for the purpose of income tax.

 

As u stated above, Assuming that you have sold the old car and took a new 1 in the same previous year and the purchase price of the new car is more than the consideration recvd on sale of old car..

u can not claim loss on sch sold asset since the block is already in existance and WDV of wich is Re.1 and more. U have to deduct the sale price of the old car from the purchase price of the new car and the balance will be your WDV on wich u r eligable to claim depn. Now see, since the car was sold at the lower price, u will automatically have higher WDV on wich depn will b allowed to you.. In the long run the loss on sale of car will automatically be allowed oner a no. of period since u r claiming higher depn..

as per company act 1956 u should have books loss in yr books, but as per income tax act 1961 if u sold a car and purchased another car than Block of assets will increase or decrease difference of the both assets only and everything will go same.....

I AGREED WITH ABHIRUP KAR

A the time of tax computation, you will have to add back the loss on sale of car, to the profit amount as per your  audited accounts to arrive at Gross Total Income.

You have mentioned that u have one more car, that means block of asset does not cease to exist. The sale consideration have to be deducted from the the block of asset.

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
ARTICLESHIP 30 June 2026
2 posts Article assistant and Articleship completed students

Chirag N Shah & Associates

Mumbai

CA Inter

View Details
Company
24 June 2026
Senior Account (VA Client Operations)

Karbon Business

Bengaluru

CA Inter

View Details
Company
ARTICLESHIP 08 June 2026
Internal & Taxation Article

O P Bagla & Co LLP

New Delhi

CA Inter

View Details
Company
12 June 2026
Accounts & Taxation Executive

Winshine Financial Services

Mumbai

CA Inter

View Details
Company
ARTICLESHIP 04 June 2026
Article

Rakhecha & Co.

New Delhi

CA Inter

View Details
Company
25 June 2026
Accounts & Taxation Executive

Dindukurthy & Associates

Hyderabad

MBA

View Details
Company
Featured 24 June 2026
HEAD - AUDIT AND TAXATION

A R JADHAV AND ASSOCIATES

Mumbai

CA Inter

View Details
Company
ARTICLESHIP 30 June 2026
Taxation Content Writer Intern

Interactive Media Pvt Ltd.

New Delhi

CA Inter

View Details