Tax treatment

capital gain

Steps involved-

1. Reduce the 'net sale price' (and not the book value) of the asset from the WDV of block to which the asset belong to.

2. After the above reduction, if the resultant figure can be either '+ve' or '-ve'. If it is '-ve' figure, then there is no depreciation allowable for the year. However, the '-ve' figure being excess price received is subjected to tax as 'Short term capital gain u/s 50 of the Act. On the other hand, if the resultant figure is '+ve' figure, depreciation allowed on such '+ve' figure at the rates applicable.

Please note, the profit/ loss on disposal of asset is not an chargeble gain/allowable expenditure for tax purposes.

Hope the above clarifies. 

CA Hariprasad Nayak

+91 9481227467