An architect exchanges his old car with new one and balance is financed. The exchange price given by car dealer is more than the WDV of car as existing on the accounts. Whether this gain/profit is to be shown in p&l account or where is to be shown while making the computation of taxable income....
Apply the following formula:
opening wdv ---
add: additions ---
less: sale price ---
closing WDV ---
If closing WDV comes to be +ve, den claim depriciation for the same
If closing WDV comes to be negative, den the same is chargeable as Short Term Capital Gain(as per section 50)
plz correct me if m wrng
Sumit seems to be right.
in such a case you will have a short term capital gain and such gain will not be credited to profit and loss account and such income will be shown under the head of capital gains
But if it is a case of block of assets then follow the procedure as given by Sumit Grover
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