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Section 50 Deemed Capital Gain

Nirav (Bcom, LLB, CA Final) (107 Points)

15 September 2010

on 1st april i have the block of plant n machinery worth Rs. 4 lacs. In october i sold the entire plant n machinery for Rs. 8 lacs and purchased some machines worth Rs. 10 lacs in January.

my question is whether Section 50 is attracted for deemed capital gains on this transaction and i have to pay short term capital gain or not.

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4 Replies

CA.G.Muguntha Narayanan (Internal Auditor at TVS Motors) (2195 Points)
Replied 15 September 2010

Yes, u can tax it under sec.50, provided the asset which u purchased is of the same block as that of the asset which u sold

CA.G.Muguntha Narayanan (Internal Auditor at TVS Motors) (2195 Points)
Replied 15 September 2010

I m sorry for my wordings above. I have missed NOT in the statement there. ie) THE ASSET PURCHASED SHOULD NOT BE OF THE SAME BLOCK AS THAT OF THE ASSET SOLD, ie, there should not be any asset available in the block of assets which have been sold

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Manmohan ACA, CS (Chartered Accountant ) (14243 Points)
Replied 15 September 2010

on sale of any assets section 50 shall be attracted only

if due to such sale (i.e. on reducing sale amount from block ) as on 31st march of that year (not on date of sale )

the block of assets cease to exist
or the value of block becomes zero or negative
or both (1) and (2)

Particulars	Note	Details
Block		Machinery
Depreciation rate		15%*
Opening WDV as on 1.04.20XX		Rs. 4,00,000
Add: addition during the yr		10,00,000
Less: ‘Money payable’ for assets sold during the year		8,00,000
Closing WDV (before depreciation )	[Note 1 ]	6,00,000
Less: depreciation [6,00,000 x 15% x 50%]	Note 2	45000
Closing WDV as on 31.3.20X1		5,55,000