Section 50 implication

Dear Devendra

As per section 32 sale proceeds should be deducted from block of assets.

Your calculation OF short term cap gains u/s 50 is correct subject to the followings:-

1. There is no other machinery in the P&M BLOCK

2. Any other asset exist but the sale proceeds exceeds the WDV of WHOLE BLOCK.

CHECK IT 

Is it correct that in case of a Pvt. Ltd. Co. the profit / loss on the sale of asset cannot be transferred to other Asset in the same block, and the net result should be credited / debited to the P&L A/c?

Regards,

Devendra

As far as IT is concerned,

reduce the amount realised on sale of the asset from the concerned block.

Section 50 implication arises when:

1. Not a single asset left in the block; or

2. Value of the block becomes negative.

While preparing P&L under companies act, only the gain/loss on disposal will come to the P&L.... Gross block and provision for depreciation should be adjusted....

Pass the foll entries:

Bank Dr.                                            3,80,000

   to WDV                                                             2,50,000

   to Profit on sale of machinery                           1,30,000 

Profit on sale of machinery Dr.          1,30,000

 to P&L                                                                1,30,000    

Instead of WDV, you actually have to pass the entry as crediting the provision for depreciation and debiting the gross value of the P&M... then you can use in sch VI depreciation schedule format.