Depreciation and section 44ad

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ARVIND JAIN (Querist)
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15 April 2012 A firm shows income u/s 44AD and has a shop as an asset. Is depreciation compulsory to be charged or deemed to have been claimed under the section? Is it necessary to charge depreciation on all assets, residential and commercial property held by firm ? In case of sale of shop is it long term gain or short term gain (Block)?Tax planning and explanation.

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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15 April 2012 Whose offering income under section 44AD deemed depreciation also allowed in such income. Those assets which are related to the firm/business are allowable to claim depreciation. The capital gain on depreciated assets always short term capital gain at the time of the block of assets either zero or negative on any day during the financial year.
Capital gain arises by deducting the WDV value as per IT act as on the date of the end of previous year immediately preceding the sale of year from the sale amount. Eventhough depreciation not claimed or not accounted in the books WDV as on date of sale(as explained above) should be considered for the purpose of capital gain.

OM SAI SRI SAI JAI JAI SAI

CA Prashant Gupta

CA Prashant Gupta (Expert)
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15 April 2012 If return filed u/44ad then depreciation us deemed to be claimed.

Depreciation is allowable only on the assets which are used in business.

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