Capital gain
This query is : Resolved
31 October 2013
A company had rented out a property and the income from rent was shown as income from house property. Since 30% exemption was claimed from the rental value, no benefit of depreciation had been taken in the computation though charged in the Profit & Loss A/c. Now the company had sold out the property. Would like to know the answer to following two questions :
(1) Since the benefit of depreciation has not been taken in the computation, indexation would be done on the Gross value of the Premises or Net value (calculated after depreciation) ?
(2) If it is after depreciation, then the Depreciation rate would be taken as per company law or income tax ?
(1) Since the benefit of depreciation has not been taken in the computation, indexation would be done on the Gross value of the Premises or Net value (calculated after depreciation) ?
(2) If it is after depreciation, then the Depreciation rate would be taken as per company law or income tax ?
31 October 2013
1.Indexation is to be done on cost of assets acquired (Gross Value).
2.No depreciation is applicable in case of capital gain cal.
2.No depreciation is applicable in case of capital gain cal.
31 October 2013
Agree with Expert,
Indexation depends upon long term asset,
If its an long term capital asset you can claim Indexation benefit....
Depreciation will not not allowed as its an residential property not a Business Asset...
Indexation depends upon long term asset,
If its an long term capital asset you can claim Indexation benefit....
Depreciation will not not allowed as its an residential property not a Business Asset...
31 October 2013
Thanks Mr. Tushar & Mr. Aryan. I want my understanding to be more clear on this by a small example.
That means if the cost of asset in gross block is Rs 100 and after depreciation of Rs 5, net block is Rs 95/-. Indexation would be done on Rs 100/- & not Rs 95/-.
That means if the cost of asset in gross block is Rs 100 and after depreciation of Rs 5, net block is Rs 95/-. Indexation would be done on Rs 100/- & not Rs 95/-.
31 October 2013
Indexation is always with refrence to gross cost of assets acquired as per sec 50, no indexation benefit on depreciable assets.
31 October 2013
No indexation benefit will allow under this situation as you depreciate the asset,
As the Asset is on WDV..
It will be a short term capital gain if such asset is sold...
As the Asset is on WDV..
It will be a short term capital gain if such asset is sold...
31 October 2013
Mr. Aryan, the asset (premises) has been acquired in the year 1994 and had been rented out. The income had been shown under "Income from House Property" only. For preparing the company's balance sheet, in the "Fixed Assets Schedule" depreciation has been charged but no benefit has been taken as only standard deduction @ 30% was taken. Would the sale now in 2013 account to long term or short term capital gain?
31 October 2013
Aryan Ji
Depreciation is not allowed as per Income tax Act,1961. Therefore, section 50 doesn't attract meaning thereby gain is not short term.
@questionnaire
Index the original cost (Rs.100 as per given example).The gain is LTCG.
Depreciation is not allowed as per Income tax Act,1961. Therefore, section 50 doesn't attract meaning thereby gain is not short term.
@questionnaire
Index the original cost (Rs.100 as per given example).The gain is LTCG.
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31 October 2013
It will case of LTCG as it is held for more then 36 months.
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31 October 2013
Thanks for the correction I forgot that the asset held for more than 36 months...
However,the income earned by the assessee on sale of depreciable asset was to be treated as long-term capital gain, entitling him to the benefit of section 54F
Citation: CIT v. Rajiv Shukla
However,the income earned by the assessee on sale of depreciable asset was to be treated as long-term capital gain, entitling him to the benefit of section 54F
Citation: CIT v. Rajiv Shukla
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31 October 2013
As you said it is building along with indexed cost of acquisition you can also claim indexed cost of improvements if any ,
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