Pgbp doubt

See while following slm Basis if sp is more then wdv then 

difference between sp and cost is capital gain(lt/st)

balance difference is notional gain. 

In case SP exceeds WDV ,but is less than the actual cost.. difference between SP and WDV is taxed as business income (called balancing charge).
And in case , SP exceeds the actual cost, then difference between SP and actual cost is taxed under capital gains and the difference between actual cost and WDV is taxed as business income u/s 41(2).
And the capital gain can be either STCG or LTCG, depending upon the holding period.

SEC 41 (2) IS APPLICABLE IN RESPECT OF ASSESSMENT YEARS  BEFORE THE CONCEPT OF BLOCK OF ASSETS WAS INTRODUCED.

BLOCK OF ASSETS

  OP WDV                                       XXX

+ ADDITION      (COST)                 XXX

                                                          XXX

-- DEDUCTION   (SP)                     XXX

WDV BEFORE DEP                        XXX

AS PER SEC 32 WDV BEFORE DEP IS TO BE TAKEN AS NIL IN THE FOLLOWING CASES:

1. WHEN WDV BERFORE DEP IS NEGATIVE
2. WHEN BLOCK OF ASSETS IS EMPTY

IN FIRST CASE THERE IS SHORT TERM CAPITAL GAIN

IN SECOND CASE THERE IS SHORT TERM CAPITAL LOSS

EXAMPLE: IN FIRST TWO CASES ONLY PART OF ASSETS OF BLOCK ARE SOLD AND IN CASE - III ALL ASSETS OF BLOCK ARE SOLD(ie BLOCK IS EMPTY THOUGH IT SHOWS POSITIVE WDV BEFORE DEP)

BLOCK OF ASSETS (10% )          I                 II                III

OP WDV                                 200000         200000       200000

+ ADDITION      (COST)            50000            50000        50000

                                              250000          250000       250000

-- DEDUCTION   (SP)              100000           300000       150000 (CASE - III ALL ASSETS ARE SOLD)

WDV BEFORE DEP                150000          (50000)       100000

             CASE -1: PROVIDE DEP ON 150000

             CASE - 2: SHORT TERM CAPITAL GAIN 50000

              CASE - 3: SHORT TERM CAPITAL LOSS 100000.

                               IN CASE - 3, WE CAN NOT PROVIDE DEP ON 100000 AS BLOCK IS EMPTY

This is the case of electricity companies. Under Sec.50A , there can be long term capital gain where the asset is held for more than 36 months.

Thank u all for the response!!

Nisha..none of the answer is suitable..although all are correct

it is not merely the electricity com. but in many other case the same treatment is observed. This differential treatment is based on specific concept. You shall get it understood by separating all such case from the case of Wdv.. then try to observe the difference.

otherwise wait for some days..I will explain ..