How ltcg adjusted in boa

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Student (Querist)
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22 April 2012 Sir, My question is how Long Term Capital Gain is adjusted in book of accounts. E.G. If I puchase a ready possession office for say Rs.500000/- in 2001-2002 and sale it for Rs. 10,000,00/- in 2011-2012. Since Rs.500000/- is the o.b. in Assets side in the year 2011-2012 then How it will be increased. My query is how amount including appreciation amt(indexed cost gain) + long term capital is adjusted. Is it directly credited to Capital A/c Pl. Inform.

CA PARTH SHAH

CA PARTH SHAH (Expert)
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23 April 2012 INDEXATION IS NOT TO BE SHOWN IN BOOKS OF ACCOUNT. IT IS ONLY USED FOR CALCULATING CAPITAL GAIN AS PER INCOME TAX ACT. YOU HAVE TO PASS ENTRY OF PROFIT OF RS 5 LACS IN BOOKS OF ACCOUNT(BOA) WITHOUT CONSIDERING THE EFFECT OF INDEXATION.

WHILE PREPARING RETURN, THIS RS 5 LACS WILL BE DEDUCTED FROM HEAD "PROFIT AND GAINS FROM BUSINESS AND PROFESSION" AND THEN IN THE HEAD "CAPITAL GAIN" CAPITAL GAIN IS CALCULATEDF AS PER INDEXATION.

ON SHORT INDEXATION IS NOT TO BE GIVEN EFFECT IN THE BOOKS OF ACCOUNT

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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23 April 2012 Parth is correct and I agree with him but if the assets has been used for business and you have claimed depreciation than it will be short term capital gain or as the case may be but the accounting entry as suggested by Parth will not change.

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Student

Student (Querist)
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23 April 2012 Thanks both of you for reply.