LIVE GST Certification Course by CA Arun Chhajer begins 21st April. Register Now!!

Regarding capital gain and depreciation

junaid (Consultant and Accountant ) (41 Points)

16 December 2016

Dear Sir, In the case of individual, assesse having only 1 depreciable car having wdv as on 1/4/15 of Rs 515338 which is sold on 9/3/16 by Rs 558248.Further another depreciable car is purchased on 23/03/16 of Rs 1015150. so what will the capital gain and depreciation for the FY 15-16 and WDV as on 31/03/16

Reply
Follow
Share

5 Replies

ankita gandhi (student) (5908 Points)
Replied 16 December 2016

Calculation of Capital Gain is as follows :
Opening WDV : 515338
+ Actual cost of new asset : 1015150
- Money received from sales proceed : 558248
Value of block : 972240
And hence there is no capital gain. Provide depreciation on 972240 for 15-16.

junaid (Consultant and Accountant ) (41 Points)
Replied 16 December 2016

Dear madam,

But madam sale is made befor purchase than how there would be no capital gain.and whether we have provide depreciation on full rate or half rate on 972240 for FY 15-16.

Sanjay S (Chartered Accountant) (1375 Points)
Replied 16 December 2016

Hey Mr. Junaid, I agree with Ankita Gandhi on this.

When it comes to Sale of Assets in Block of Assets Concept, there can be 2 possible situations:

1. If all assets in block are sold (No asset exists as at end of Financial year)

In this case, the block ceases to exist and No depreciation is computed. The computation of Capital Gain/Loss (Short Term or Long Term) is made.

2. If some assets remain in the Block (Some asset exists as at end of Financial Year)

In such a scenario, the Depreciation is computed on the Remaining value as at end of Financial year [Opening + Purchase - Sales]. Here no Capital Gain/Loss is computed.

In your case, some assets still exist in the block [Cars] and hence the depreciation is computed on such value.

No Capital Gain/Loss is required to be computed.

Depreciation may be computed as Rs. 9,72,240*15%*50% (since new car put-to-use for less than 180 days) = Rs. 72,918

[Above computation is on assumption that the cars are not being run-on-hire.]

Hope this helps