Sale of Assets of Partnership firm

Chirag (9 Points)

05 June 2025

Hello sirs,

M/s XYZ a partnership firm is selling factory Gala at rs 10,00,000 ,

Original cost was 500000 purchased on 18-11-1994 , wdv of same is 8590 as on 31-3-25

Is it STCG OR LTCG ?

and what would be cost of acquisition?

Is indexed cost allowed if LTCG

Thanks :)

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2 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (194284 Points)
Replied 05 June 2025

Any gain or loss arising from the sale of depreciable assets (assets on which depreciation has been claimed) is always treated as short-term capital gain (STCG) or short-term capital loss, regardless of the period of holding.
STCG = Sale consideration - WDV of block.
This rule applies even if the asset was held for more than 24 or 36 months.
Indexation is not available for depreciable assets under Section 50, even if they are held long-term.

CA Rashmi Gandhi (Chartered Accountant) (86483 Points)
Replied 06 June 2025

The factory gala is a depreciable asset, part of a block of assets.
As per Section 50, even though the asset is held for more than 36 months, the gain will be treated as Short-Term Capital Gain.

📌 Therefore, this is STCG even though the asset was held for more than 30 years.

Since this is a depreciable asset, we use the WDV method, not indexation.
The entire block may be considered to be extinguished if this was the only asset in the block.

If: