Reduction in block of asset in case of sale of asset

Tax queries 424 views 4 replies

CA PARTH SHAH

In Practice

1951 Points Joined December 2009

An Assessee have a car in 15% Block of asset with wdv of car -Rs 4,30,000. Also car loan was also exisiting for Rs 290000. Now he sells his car at Rs 347000 out which the buyer pays the bank loan direct on behalf of the assesee of Rs 290000. and gives balance Rs 57000 by cash to assesee.

The query is as under:

How much reduction will be done in wdv. Rs 347000 or Rs 57000., as per the section 43(6), it is said that WDV will be reduced of the moneys payable in respect of any asset failing within that block, which is sold or discarded or demolished or destroyed during that previous year together with the amount of the scrap value, if any, so, however, that the amount of such reduction does not exceed the written down value as so increased.

As per my interpretation only Rs 57000 will be reduced from WDV.

Replies (4)

Karthik.V.Kulkarni

Chartered Accountant

594 Points Joined December 2012

Hi Parth,

In my opinion Rs 3,47,000 should be deductible as that is the money pable "in respect" of the asset. To whom it is paid is irrelevant. If money is paid "in respect" of the asset same has to be deducted from WDV. As the payment is to bank on behalf of the assessee the same is as good as payment to assessee. Thus the whole amount should be considered.

Regads,

Karthik V Kulkarni

Prabeen Jalan

33 Points Joined April 2011

in my opinion Rs 347000/- should be deducted from the block in respect of sale of car even though only Rs 57000/- has been paid to the assesse after settlement of loan.

Regards

Praveen jalan

Miss Rinkal

Student

1309 Points Joined January 2009

It will be 347000 only since moneys payable was 347000 originally to the assessee. It is presumed that the bank loan will be repaid from the car sold. Hence it should be the gross amt and not the final settlement that should be considered for calculating wdv for the purpose of sec 32.

It should be the selling price of the car that has to be deducted and not the balance amt that is remaining in the hands of the assessee.

Prabhat Modi

Student

301 Points Joined February 2013

Dear The amout deducted is actual money payable and not the sum paid for settlement of loan. In ur case Rs. 347000 will be deducted fron respective block to arrive at correct wdv. Thanks