RAKESH (Almost CA) (2199 Points)
07 June 2010Hi.,
Why loss on sale of assets is not allowed as deduction while calculating the income of business head and why profit is also not taken into account. why ??????????? which section speaks about this inadmissibility of expenses and the incomes. Please help ........ so where will the profit on sale of assets is taxed then if it is not taken into account..........
Anand
(Chartred Accountant)
(435 Points)
Replied 07 June 2010
profit on sale of fixed asset is taxed under the head capital gain.
CA Manish K Dhoot
(CA, B. Com, NCFM, CPCM)
(5015 Points)
Replied 07 June 2010
loss is also treated under capital gain.. loss is set off againts capital gain and can be carried forward
RAKESH
(Almost CA)
(2199 Points)
Replied 08 June 2010
question is why is treated as inadmissible expenditure and which section explains about this. please tell
CA Shiv
(Business Controller)
(2987 Points)
Replied 08 June 2010
Lets make it simple...
Is selling of asset is your regular business? Answer is no. You carry certain business of trading, material, construction, consulting etc. anything.but u dont do purchase and sale regularly. So it is not considered as in regular business.
Also we have separate head which considers the profit or loss of assets. so we deduct that amount and take it to head of capital gain....
Akhil Gupta
(Manager F&A)
(856 Points)
Replied 08 June 2010
If sale/purchase of assets is not not your regular business then there is separate treatment given under Income Tax Act i.e., DEPRECIATION. If you sale/purchase any assets then it will be deducted/added in the respective block of assets.
If you sale any assets and Block of assets becomes Nil then there will be a short term capital gain.
If all the assets of the blosk are sold out there there will be short term capital gain/loss as per the calculation.
Section 32 of the Income Tax Act govern this treatment.
Shudhanshu Agrawal
(Business)
(2570 Points)
Replied 08 June 2010
As righty said by Shivang that assets are not goods. Moreover assets falls under the defination of capital assets Section 2(14) of the Income Tax Act, 1961 which are assessiable under the head capital gain and not PGBP.
Jagdish Bhalia
(Practicing CA)
(453 Points)
Replied 08 June 2010
Fixed Assets comes in the definition of capital assets section 2(14). Any gain or loss arises from capital assets mentioned in section 2(14) will be taxed under the head Capital Gains.
Bhavik Davda
(Proprietor)
(238 Points)
Replied 08 June 2010
If Selling of business asset is being considered as the business income then the provision of Sales tax, excise will also be made applicable to the sale and hence a Tax invoice will be issued on account of sale- As said, it is not a regualr business activity and should not be taken into account.
Mahesh Chalse
(CA Final Student)
(56 Points)
Replied 08 June 2010
Hey Rakesh, refer to the answer posted by Akhilji Gupta. This is the perfect answer to your query as the taxation of fixed assets is covered under Sec. 32 of the Income tax Act , i.e, Depreciation when the purchase / sales of fixed asset is not a regular business.
Anand
(Chartred Accountant)
(435 Points)
Replied 08 June 2010
Rakesh you can also refer section 28 and 45 for more clarity.
priyanka bathwal
(student)
(160 Points)
Replied 08 June 2010
Sarita Bhardwaj
(Assistant Mnager in Finance)
(51 Points)
Replied 08 June 2010
if u r dealing with properties or have a business of property dealer then it is aloss under pgbp.because in this case it will be treated as good
if u r holding it as an asset, then its sale is treated as sale of asset and comes under capital gain/loss
NITIN JAIN
(CA FINAL STUDENT)
(42 Points)
Replied 08 June 2010
If sale/purchase of assets is not not your regular business then there is separate treatment given under Income Tax Act i.e., DEPRECIATION. If you sale/purchase any assets then it will be deducted/added in the respective block of assets.
If you sale any assets and Block of assets becomes Nil then there will be a short term capital gain.
If all the assets of the blosk are sold out there there will be short term capital gain/loss as per the calculation.
Section 32 of the Income Tax Act govern this treatment
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