30 September 2011
Dear Sir, i have query on the above subject and i seek your help.
when depreciation is allowed as deduction from income from business , why income from sale of same depreciable asset is charged or covered by section 50 as STCG under capital gain and not as an income from business?
where as when a telecom licence fee is amortised and sold subsequently . the difference from cost on date of sale and sale proceed to the extent taken deduction from business income is taxed as business income and balance is taxed as capital gain?
i hope the query is clear.. waiting for your reply
30 September 2011
A business asset is a capital asset and sale of capital asset attracts capital gain.
Therefore, sale of business asset attracts capital gain under Section 50B.
Licence fees is not a capital asset. It is an expenditure which is allowed to be ammortised over the period of the licence.
Further, the chapter of profits and gains of business or profession provides specifically the treatment of claiming deduction & taxability of licence fees.
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