Kunjan (Practice) (121 Points)
07 January 2022to ca professionals,
If assesseee has not claimed depreciation on building ever and has sold away that building this year at such a high price that that block gets over/ negative/nil.
is it a short term capital gain u/s. 50?
(my view is if depreciation is not claimed in past, concept of block of asset cannot come.
at the most, it will be business profit (not short term cap. gain).
any views?
regards,ca kunjan
Dhirajlal Rambhia
(SEO Sai Gr. Hosp.)
(177732 Points)
Replied 07 January 2022
For what purpose building used for?
Kunjan
(Practice)
(121 Points)
Replied 07 January 2022
it was main and only office of of a jewellery trading firm.
Kunjan
(Practice)
(121 Points)
Replied 07 January 2022
now they shifted to gujarat. so mumbai office is sold away n they sitting on rent in surat.
Dhirajlal Rambhia
(SEO Sai Gr. Hosp.)
(177732 Points)
Replied 07 January 2022
If depreciation was not claimed, whether the building was declared under fixed assets or as investment in BS?
Kunjan
(Practice)
(121 Points)
Replied 07 January 2022
fixed asset in building block only. just strangely no dep was claimed (accoountant used to give explanation we thought value increases of buildihng so since many years no depreciation)
i fear--> will department forecfully grant depreciation since it was pourchased n make it depreciable asset n then tax it as short term cap gain u/s. 50?
Dhirajlal Rambhia
(SEO Sai Gr. Hosp.)
(177732 Points)
Replied 08 January 2022
Yes, it can happen. But check the business owner & the building owner relationship first.
Is it proprietorship with same individual owner of the building? or different.
Kunjan
(Practice)
(121 Points)
Replied 08 January 2022
Assessee is a firm. office also in firm's name.
assessee has bought undedr construction office (possession not taken) so i am using that as block continues as word is acquired. I wont claim dep on new office as not put to use.
god help assessee,
anyways, ty sir.
ty.
Kunjan
(Practice)
(121 Points)
Replied 08 January 2022
new asset is fully paid for but under constrution. anyways, ty for ur time sir
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 10 January 2022
Is it not lower of carrying amount or fvlcd when fixed assets are disposed as per as 19? If this is the case, asset will be depreciated
Kunjan
(Practice)
(121 Points)
Replied 10 January 2022
19? Means as 19 on leases? Sir it's ownership office...i didn't get ur point sir.
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 11 January 2022
Sorry, I had a typo. I was referring to AS10 standard disposal and retirement criteria.
Manish
(CA)
(1172 Points)
Replied 14 January 2022
| Originally posted by : CA Kunjan Shah | ||
 |
fixed asset in building block only. just strangely no dep was claimed (accoountant used to give explanation we thought value increases of buildihng so since many years no depreciation) i fear--> will department forecfully grant depreciation since it was pourchased n make it depreciable asset n then tax it as short term cap gain u/s. 50? |
 |
Depreciation is allowed irrespective of the claim as per explanation 5 in section 32.
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 15 January 2022
I appreciate the owners dream of appreciating the building. Nowhere I read that depreciation is compulsory.
CAclubindia
