29 August 2008
A partnership firm has a taxable short-term capital gain of Rs.100,000 during AY2008-09. The firm shows a sale of asset on 31.03.2008 to one of the partners: W.D.V. of the block of asset Rs.300,000 and sale price of part of the asset Rs. 50,000. The block of asset exists. The firm sets off the short-term capital gain of Rs.100,000 with the short-term capital loss Rs.250,000. The sale transaction is not a mere book entry because the firm has received the payment from the partner which is also reflected in the bank statement. Is this Tax Evasion or Tax Planning?
29 August 2008
if block of asset is not exist then shorterm capital loss will be set off against short term capital gain why you are selleing this assets to partner it is important & the wdv value is rs 300000/- & you sold at rs 50000/- to one of the partner as per incmetax act no problem & you sold those assets which are useful or not
29 August 2008
hi, tarun, Can u plz tell me the section which says that there will be no short-term capital gain or loss if block exists? I think Section 50(1) doesnot say that there will be no short-term capital loss if block exists.
30 August 2008
In my opinion, section 50(1) says that if an asset is sold from block of asset and the the sales realisation is in excess of total WDV of that block , then the excess shall be treated as STCG, and WDV shall be NIL. But if the sales realisation is lesser then the WDV, then you will have to charge depreciation on balance WDV and no STCL can be claimed. In your query, it is clear that there is a block existing, means sale value is lesser then WDV, hence you can not claim STCL and you will have to charge depreciation on balance WDV.
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