Taxablity of fixed assets

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tushar

Chartered Accountant

22 Points Posted on 17 September 2014

I have sold a fixed assets for Rs 4 Lac for which i have earned a profit of Rs 40000 as per Companies Act, but in income tax i have a opening wdv of around Rs 40 lac so there was no cease of block so no capital gains tax. In computing income from PGBP i have deducted the amount from profit as per books.

Whether the profit as per companies act can be taxed in other sources.

Please help

Thanks in advance

Replies (2)

Mayuri Shelar-Private Tuition

Myself Provides Private Tuition for CS

31 Points Posted on 17 October 2014

Taxation will arise as per the income tax act..there are accounts which needs to be maintained as per the companies act ....Capital Gains calculation will be done as per the income tax act ...in the books profit as per companies act will be shown...

Swami Ayyappa Nuli

TAX ADVISOR & CONSULTANT AT G.S.T SUVIDH

997 Points Posted on 17 October 2014

Entire sale proceeds need to be deducted from w.d.v of respective block and you need not to compute capital gain on it. So if you have Net profit of Rs.1,00,000(After including Profit on sale of assets of Rs.40,000), while computing Income from PGBP you need to offer Rs.60,000 only as business Income and you need not to offer 40,000 as capital gain. The reason being as you deduct sale proceeds of asset from W.D.V, you will get less depreciation to that extent and you are paying extra tax on it. If you again offer such 40000 as capital gain, it amounts to Double taxation.