Whether STCG is chargeable or LTCG is chargeable?

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Mr.X purchased a shop for Rs.1000000 on 20/10/2005.This shop was used for business but Mr.X never claimed depreciation on it and never included above shop in block of assets.He showed above shop as investment in balance sheet.He sold this shop AFTER 3 years for Rs.1500000.The shop is a depreciable asset but depreciation has never been claimed.

 

Now my question is that whether capital gain tax will be chargeable as STCG or LTCG?What should be the tax treatment?

Replies (3)

According to section 2 (14) of the IT act Capital Asset is defiened as property of any kind held by the assessee whether or not connected with his business.In the Above Case Mr X Purchased and used the shop for his business.Am surprised to learn that Mr X Classified the above shop as 'Investment' in Balance Sheet.It needs to be put under assets.And he ought to compute depreciation for it as he has used the shop and enjoyed the benefit of it for his business.And according to section 50, any capital asset for which depreciation is allowed if transferred then gains would fall under Short Term Capital Gain.

I have long term capital gain during FY2008-09 from shares sold from an unlisted company. During the same Fy, I have short term capital loss in shares, listed on stock exchange. I want to know if the loss is adjustable against that gain?

Hi Jeyanth

Short term capital losses are always adjustable against long term capital gains, provided the losses had been income is chargeable to tax.

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