17 August 2013
one of relative is engaged in running a dairy with 20-25 cattle ie cow and he has stated his work with 2-3 cattle only since along time.at present his earning is sale of milk only . The total value of all the cattle are Rs.20.00 lac approx. now he want to wind-up his diary business. my question is that the consideration received against sale of cattle's is taxable under the income tax and which type of document he have to prepare as proof of sale so that income document may be shown to income tax department in future .
17 August 2013
As per the provisions of Section 2(14) “Capital asset” means property of any kind held by an assessee, whether or not connected with his business or profession, but does not include -
(i) Any stock-in-trade, consumable stores or raw materials held for the purposes of his business or profession;
(ii) Personal effects, that is to say, movable property (including wearing apparel and furniture, but excluding jewellery) held for personal use by the assessee or any member of his family dependent on him.
Explanation : For the purposes of this sub-clause, “Jewellery” includes - (a) Ornaments made of gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals, whether or not containing any precious or semi-precious stone, and whether or not worked or sewn into any wearing apparel;
Since the cows are used for the purpose of the business on sale of the cows capital gains will arise as the assets is not depreciable and accordingly on the entire amount of investment capital gains is to be calculated.
Had the cows were used for personal use then the same is not a capital assets u/d 2(14)
CAclubindia
