banner_ad

Taxability of sale of capital work in progress

Tax queries 3636 views 5 replies

A company has CWIP of Rs.25 lac which is basically related to software. Now the company dont have funds to invest further in CWIP to complete the same and want to sell the same to other company. If other company is ready to buy the same at 40 lac, what would be the tax liabilities on 15 lac received excess. Is it capital receipt or revenue receipt (company is not in the busines of producing software). If it is capital receipt will there be any capital gain tax applicable and if applicable how do we calculate the tax, as company has been spending money on this project for the last 3 years.

Replies (5)

you like to say that you have sell out the plant and machinery installed ( capital goods), 

if depriciation is claimed in earlier years, then it will go under sell of capital goods, and the profit would get tretment as revenue receipt. 

However if depriciation is not availed then there are two slabs, 

1) aquisition more than 36 months, will get Long term capital gain tax ( index benefit may be claimed) 

2) aquisition less than 36 months will get short term capital gain tax (at par with revenue receipts)

Hi, it depends on what business your company is doing and for what purpose the software is being built. Please decide after considerng the facts of the case.

Dear shaji

which type  of your bussiness in software company.

thanks & regards

ramanuj

 

 

The company is in the business of e-commerce, like flipkart. They wanted to develop a software package / app to be used in their business and not for selling it to customers.

" A company has CWIP of Rs.25 lac which is basically related to software. Now the company dont have funds to invest further in CWIP to complete the same and want to sell the same to other company. If other company is ready to buy the same at 40 lac, what would be the tax liabilities on 15 lac received excess. Is it capital receipt or revenue receipt (company is not in the busines of producing software). If it is capital receipt will there be any capital gain tax applicable and if applicable how do we calculate the tax, as company has been spending money on this project for the last 3 years."


 


CCI Pro

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
Featured 02 May 2026
Senior Executive

hitesh chandwani & co

Pune

B.Com

View Details
Company
Featured 29 April 2026
Manager- Finance and Compliance

Naveen Fintech Pvt Ltd

Kolkata

CA Inter

View Details
Company
Featured 14 April 2026
GST CONSULTANT

Abhishek G Agrawal & Co.

Korba

CA Final

View Details
Company
Featured 13 April 2026
GST CONSULTANCY

Abhishek G Agrawal & Co.

Korba

CA Final

View Details
Company
Featured 28 March 2026
Accountant

Ashok Amol & Associates

New Delhi

B.Com

View Details
Company
Featured 28 March 2026
CA Final

Ashok Amol & Associates

New Delhi

CA Final

View Details
Company
Featured ARTICLESHIP 19 March 2026
Article Assistant

Gupta Sachdeva & Co. Chartered Accountants

New Delhi

CA Final

View Details
Company
Featured 14 March 2026
Associate CA

N N V Satish&co

Hyderabad

CA

View Details