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Swati verma

91 Points Posted on 06 July 2015

I have Following queries :-

I. Why Depreciable assets are always short term, what is the Reason behind that?

II.Why profit & loss on sale of fixed assets is adjusted in block itself? Why accounting treatment on sale of asset is different from income tax?

III. Why speculation in shares is allowed by SEBI?

IV. Why speculation Loss is not allowed to be adjusted against normal profits?

plz reply soon

thanks in advance....

Replies (1)

ROSHAN PAUL JOSEPH

CA Final student

289 Points Posted on 06 July 2015

I am not sure , but I would like to express my opinion on this:

which is purely my understanding and may not be correct--

Why Depreciable assets are always short term, what is the Reason behind that?

Reason: If it is not a short term asset, it will be a Long Term Capital Asset

and for LT Capital Asset, benefit of Indexation is available.

A depreciable asset in most cases, does not realise an amount equal to its Actual Cost on its Disposal/ Sale.

So it will result in a huge loss after the benefit of Indexation, which when netted of results in reducing the profit earned and thereby a decrease in Tax amount.

Whereas the depreciation has already been allowed as an expense, thereby resulting in double deduction