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Sale of fixed assets

Pavithra (Student CA Final ) (69 Points)

19 November 2015

Hi all,

On sale of fixed assets, there is a loss as per Companies Act. And I have continued the asset in the block as per IT Act. My query is whether we can claim the loss on sale of asset as per Companies Act while calculating business income as per IT Act i.e., under PGBP

Thanks in advance

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6 Replies

Karthik.V.Kulkarni (Chartered Accountant) (594 Points)
Replied 19 November 2015

It doesn't matter what you claim in companies act. If you have loss as per income tax act then you can claim shorterm capital loss.

Anitha (Articles) (121 Points)
Replied 20 November 2015

Hi pavithra,

Income Tax Act prescribes block method, Sale price is deducted from WDV.

In which case, even if there is loss, if block exist we'l continue to provide depreciation for next years.

I think we cant avail both depreciation and allowability of loss on asset at same time.

Anitha (Articles) (121 Points)
Replied 20 November 2015

Hi pavithra,

Income Tax Act prescribes block method, Sale price is deducted from WDV.

In which case, even if there is loss, if block exist we'l continue to provide depreciation for next years.

I think we cant avail both depreciation and allowability of loss on asset at same time.

Anitha (Articles) (121 Points)
Replied 20 November 2015

Capital loss can be claimed only if there is no asset in block

Pavithra (Student CA Final ) (69 Points)
Replied 20 November 2015

Thanks all.. My query is in ITR there is a line item called profits on sale of fixed assets to include the same in business income.. Then why should we deduct loss on sale of fixed assets from business income..