mukesh sarawagi (ca final) (142 Points)
11 January 2010A company have all its income from agriculture. As we know agriculture income is exempted from income tax . so, the company does not charge depreciation on its assets used for agriculture purposes.Now, the company sells its one of the assets,say tractor on which depreciation is not previously charged.As per Income tax laws how capital gain will be calculated. is it calculated as block concept or it is indexed.
Amir
(Learner)
(4016 Points)
Replied 11 January 2010
Dear Mukesh,
Since Company has never claimed depreciation then I don't think Concept of Block of Assets will work in this case..
Capital Gain will be calculated on individual assets which can be STCG as well as LTCG..
Max Payne
(employed)
(2569 Points)
Replied 11 January 2010
Dear Mukesh, it is not the companies' option to claim depreciation.
Explanation 5 to section 32(1)(ii) makes it mandatory to claim depreciation. The company should have claimed depreciation even though agricultural income is exempt.
So the block concept will be applicable and it will be STCG or STCL only because section 50 makes gain/loss arising from depreciable assets short term. Hope you know the block concept so i am not explaining in detail about it.
To answer your question,
1. The assets should form of depreciable block. Compute capital gain if the value of block is nil or there are no asset remaining
2. Indexation should not be done because the benefit of indexation is not available for depreciable assets.
GSTR 9 and 9C for FY 23-24 as amended by Notification 12/2024 dated 10th July 2024(with recording)
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