05 September 2009
Hi, My query is as follows. There were certain assets taken on lease in one of the companies premises. However, the company decided to wind operations in that premise. Subsequently, the company purchases those assets on lease and sold it. There are proper invoices for purchase and sell. Can the company expense the loss on purchase and subsquent sale of these leased assets without capitalising the assets. The whole transaction was completed within 15 days and the amount involved is about 5 lacs. PLz suggest
05 September 2009
The difference between the purchase and sale prices is the loss/profit on this transaction.If u do not write it off in the current year the debit balance in this account will be carried forward to the next year when u cannot justify the expense as it relates to an earlier year. As far as income tax is concerned the block of assets concept applies and any profit/loss on sale of assets does not affect the total income/loss.
06 September 2009
Thanks for the reply. But I dont want to capitalise the assets. Can i not expense this out without capitalising not showing this as an asset in books and income tax.
CAclubindia
