01 January 2008
Dear Sir, Happy new year. I have a query regarding applicability of deemed STCG on depreciable assets. FACTS of the case: X Pvt Ltd have a factory building constructed in February 1990 for Rs.10 lacs on a leasehold land (rights for 99 years). The building was used for production purposes upto September 2000. Hence till A.Y.2001-02, we were allowed depreciation under I.T.Act. The closing WDV on March 2001 was Rs.6 lacs. From 2001 the building was let out for rent and income was considered under head House Property. In June 2007, the building was sold for Rs.30 lacs. QUERY : Whether we can claim LTCG with indexation from 1990 on WDV, claiming the asset to be no more depreciable and as a capital asset; and also claiming that the source of income generated from the asset has changed ? If not what should be the taxability of the case ?
01 January 2008
SECTION 50 C DEALS WITH COMPUTATION OF CAPITAL GAINS IN CASE OF LAND AND BUILDINGS. SECTION 50 C IS APPLICABLE WHEN THE FOLLOWING CONDITIONS ARE SATISFIED. 1. THERE IS A TRANSFER OF LAND OR BUILDINGS OR BOTH .THE ASSET MAY BE LONG TERM OR SHORT TERM AND IT MAY BE DEPRECIABLE OR NON DEPRECIABLE. 2.THE SALE CONSIDERATION IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY ANY AUTHORITY OF STATE GOVT. FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER. IF THE ABOVE CONDITIONS ARE SATISFIED,THE VALUE ADOPTED BY STAMP DUTY AUTHORITY SHALL BE TAKEN AS FULL VALUE OF CONSIDERATION FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN. FROM THE FAIR VALUE OF CONSIDERATION DEDUCT THE INDEXED COST OF ACQUISITION AND THE DIFFERENCE IS CAPITAL GAIN . SO YOU MAY CLAIM LTCG WITH INDEXATION . R.V.RAO
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