Related to capital gain

503 views 6 replies

jayesh khokhariya

Practice

112 Points Joined January 2016

Assess Has Sold Depreciable Assets (Motor Car) For Rs.5 and Opening wdv For the same assets was rs. 3 and he has also bought new motor car for Rs.7 during the year than what about depreciation and Short term capital gain ?????????????///

Replies (6)

Tony John

Chartered Accountant

6085 Points Joined November 2011

Section 50(1) of Income Tax Act (regarding capital gains on transfer of depreciable asset) shall apply when WDV of a block of assets on the last day of the previous year is zero or block ceases to exist. In the given case, the block is existant on the last day of the previous year. Moreover closing WDV of the block is 3+7-5=5 which is greater than zero.

Hence in my opinion, no capital gains shall arise during the previous year. As regards depreciation, it will be calculated as per rates applicable to the block based on 180days/full year criteria on Rs. 5

Guest

agree with mr tony...

u earn cap gains only when the whole block is sold for more than WDV or part is sold for more than WDV... i.e WDV doesnt exist and sale value is more than WDV...if WDV exists u can take depn

Vidhi jani

Morbi

24 Points Joined January 2016

Agree with Mr Toni and ubaid

Manoj BG

Tax Professional and in Service

1795 Points Joined June 2009

Agree with experts. Depreciation would be chargeable on Rs.5 lakhs (being balance left after deducting sale value from op WDV plus new addition) and no capital gain would arise. If new car put to use for >= 180 days, then full rate of depreciation would applies on Rs.5lakhs otherwise it would be half of effective rate of depreciation.

Thanks and Regards,

Manoj B. Gavali