treatment on sale of land & bldg

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17 November 2009 an assessee purchased land on 1/1/2000 for rs. 10 lacs. on 1/10/2005 building was constructed on it (complete). the cost of construction of bldg came to rs. 15 lacs.

on 31/03/2006 the assessee charged dep on land & bldg @ 10% on rs. 25 lacs.

My first ques ie whether charging of dep on rs. 35 lacs including value of land is correct as land is not a depreciable asset.

second question is if the assessee sells the land & bldg on 31/03/2007 for 50 lacs ( 35 lacs for land & 15 for bldg) whether capital gain has to be bifurcated into STCG on sale of bldg & LTCG on sale of land

chetan soni

chetan soni (Expert)
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17 November 2009 Relating to your question:

on First : You can not claim the depreciation on land.

on second : As you said you have claimed the depreciation on the assets then depreciation assets are out off the provisions of capital gains chapter.

You need to treat this as business income.