sandeep daga (student) (47 Points)
29 January 2011PLZ. clear my dobut
a asset which depreciates is always taxed as short term capital gain or loss.
in PGBP there is a rate of dep. on residential house property as 5% and i have seen in many books that a residential house property which is used for more than 3 years has been taxed as long term. so how is this happening plz. explain
CA.G.Muguntha Narayanan
(Internal Auditor at TVS Motors)
(2195 Points)
Replied 29 January 2011
Dear Sandeep,
I too agree with u that buildings which are used mainly for residential purposes except hotels and boarding houses are subject to depreciation at 5%. Hence, when the asset is sold, it attracts the provisions of Section.50. When the asset is sold, the net result is treated as STCL. Section 50 deems the gain arising on transfer of depreciable assets only for the purpose of computaiton of capital gain.The benefit of indexation is denied and only WDV is allowed. However, such deeming fiction cannot take away the character of the asset as a long term capital asset. Hence, such buildings are LTCA only. i guess your question may be intended to avail exemption under sections 54EC
sandeep daga
(student)
(47 Points)
Replied 31 January 2011
thank u for the reply
i know the asset will be LTCA only but should it not be taxed as STCA
Dheeraj
(Learner)
(1100 Points)
Replied 31 January 2011
no, if the period is more than 3 yrs
it always be taxed as LTCA, and it is a beneficial section, ur LTCG will be charged @ 20%
CA.G.Muguntha Narayanan
(Internal Auditor at TVS Motors)
(2195 Points)
Replied 31 January 2011
Dear Sandeep,
Section 50 does not say that the asset would be a STCA. It is taxed as LTCA only. However, the loss is deemed to be STCL, instead of LTCL.
CAclubindia
