Negative block in Depreciation schedule

Hi.. Please help me to solve this.

 

My opening WDV for a block of Plant and machinery is at Rs.1,000/-. During the year, additions to this block for more than 180 days is for Rs.55,000/- and for less than 180 days, its for Rs.35,000/-. But, during the year, an asset belonging to this block is sold for Rs.75,000/-, the individual WDV can not be ascertained, hence entire amount is treated to be the profits on sale.

 

Now, my Opening WDV after additions for more than 180 days and deducting sale value becomes negative. So, how to calculate the depreciation in such case and what will be the Closing WDV with reference to Sec-32? Also, state what will be the implication on Capital gains part.

Replies (5)

Depreciation is calculated on on Closing WDV. Also there cannot be negative WDV. It shall be considered as NIL.

As in your Question the WDV on the closing date is NIL, Depreciation shall also be Nil.

the tax treatment can be shown as -

 

opening WDV                                              1000

+ purchases (more than 180 days)          + 55000

+purchases (less than 180 days)             +35000

-sales                                                        (75000)

                                                                  ---------------

balance on 31.03                                         16000

depreciation  @ 7.5 %                                 1200                                                       

                                                                  ----------------  

 as per it act on dep.

above calculation is right and if ur block sold more then book prise it's called short turm c.g

it is not called nagative block of aseet

I agree with this. The calculation is correct.

in ur query thr is no negative block. varun has given correct solution

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