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Sale of Depreciable asset - Depreciation and Capital Gain.

Uday G (Business) (254 Points)

16 March 2010

Dear friends,

If a sole proprietary concern is dissolved and its assets are sold during the year.

1). can it claim the depreciation on the sold asset in its business income ?

2). how to calculate the capital gain on sale of depreciable asset ?

kindly give your valuable suggetion.

thanks

Uday.

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15 Replies

Pradeep Sharma (student) (114 Points)
Replied 16 March 2010

My dear friends Uday

we can not claim the deprecation on the sold fixed assets during the year in the business income,but we can claim it in calculating the capital gain

calculation is as follows

Sale consideartion / selling value -------------

less;-Opening Balance of fixed assets as per the balance sheet -----------

less:- expenses on transfer / sale of assets ------------

Results ;- will be your Short term capital gain -------------------------

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CA Saurabh Shukla (Accounts Executive) (223 Points)
Replied 16 March 2010

no depriciation is avilable in the year of sale if all the assets in the block ends or if sale value is more than wdv of block.

In that case, capital gain or loss has to calculate as per sec. 50

there are 2 case in sec 50

case1- all assets in block cease to exists

Sale value after trs. exp.

Less Cost of Acquisition

if bal. is negative it means STCL, otherwise STCG.

Case2 - sale value is more than wdv

Sale value after trs. exp.

Less wdv

bal. is STCG

Remember there is no reqirement of indexation

correct me if i m wrong

2 Like

Rajat Singhal CA,CS,CFA (Senior Manager (F&A)) (254 Points)
Replied 17 March 2010

Dear Saurabh bhai u r correct, there will be no depreciation in the year of sale.

Section 50 for computation of capital gains in case of depreciable assets is produced here under:

Section 50. Special Provision for computation of capital gains in case of depreciable assets.

Notwithstanding anything contained in clause (42A) of section 2, where the capital asset is an asset forming part of a block of assets in respect of which depreciation has been allowed under this Act or under the Indian Income-tax Act, 1922 (11 of1922), the provisions of section 48 and section 49 shall be subject to the following modifications :-

(1) where the full value of the consideration received or accruing as a result of the transfer of the asset together with the full value of such consideration received or accruing as a result of the transfer of any other capital asset falling within the block of the assets during the previous year, exceeds the aggregate of the following amounts, namely:-

(i) expenditure incurred wholly and exclusively in connection with such transfer or transfers;

(ii) the written down value of the block of assets at the beginning of the previous year; and

(iii) the actual cost of any asset falling within the block of assets acquired during the previous year, such excess shall be deemed to be the capital gains arising from the transfer of short-term capital assets;

(2) where any block of assets ceases to exist as such, for the reason that all the assets in that block are transferred during the previous year, the cost of acquisition of the block of assets shall be the written down value of the block of assets at the beginning of the previous year, as increased by the actual cost of any asset falling within that block of assets, acquired by the assessee during the previous year and the income received or accruing as a result of such transfer or transfers shall be deemed to be the capital gains arising from the transfer of short-term capital assets.

Regards

Rajat

PRATEEK (ACA) (102 Points)
Replied 22 June 2010

THERE ARE TWO CONDITIONS FOR CLAIMING DEPRECIATION]

THERE SHOULD BE ASSET IN THE BLOCK AND

THERE SHOULD BE A VALUE(WDV) IN THE BLOCK

IN THE PRESENT SCENARIO ALL THE ASSETS HAVE BEEN SOLD IT MEANS NO ASSET EXIST IN THE BLOCK ,THEREFORE YOU CANNOT CLAIM DEPRECITION AND THERE WOULD BE SHORT TERM CAPITAL GAIN/LOSS AS PER SECTION 50

Bhushan Borse (Sr. Accountant) (30 Points)
Replied 22 July 2012

Dear Sir,

How to calculate Depreciation on Depreciable Assets and capital gain on depreciable assets. Details of transaction are as follows - ( A. Y. 2012 -2013 )

Sale : Tata Spacio dt. on 10/09/2011 Rs. 92500/-

Purchase : Mahindra Genio Dt. on 03/06/2011 Rs. 568600/-

W.D.V. Of Tata Spacio as on 01/04/2011 Rs. 83300/-

All this assets are commercial Vehicle.

Please give me a solution on this depreciable assets.

1 Like

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Bhushan Borse (Sr. Accountant) (30 Points)
Replied 22 July 2012

I have one property during A. Y. 2011-2012 amounting Rs. 83300 W.D.V as on 31/03/2011 . This property sale during A. Y. 2012 -2013 of Rs. 92500. I Purchase new Property during A. Y. 2012 -2013 of Rs. 568600. so please tell me Capital Gain on depreciable assets and calculation of depreciation.

Thanking You

Ramakrishnan (Student) (81 Points)
Replied 16 November 2012

Dear Bhushan Borse., 1. STCG For A.Y 2012-13:- Sale consideration received = Rs.92500 (P.Y 2011-12) Less: Opening W.D.V as 01.04.2011 (Being closing bal as on 31.03.2011) = Rs.83300 STCG = Rs.9200 note: 1.No Depreciation is allowed in the year of sale of dep.,asset 2.There was no expenses to deduct in selling activity 3.Purchase of another Dep.,asset is irrelevant to this computation & But u can avail dep., on this asset in that A.Y., as admissible business expense at specified rate in IT Act., note: The dep.,can claim @ 100% in specified rate if it is used 180/more days in business from acquisition;Otherwise only @ 50% on specified rate of dep.. Have u got my point!!

Apolina Anthony (Article Assistant) (21 Points)
Replied 06 August 2013

How to calculate Capital Gain on sale of depreciable car?

Details:-

Sale: 16/4/2012 Rs.70000

WDV on 1/4/2012 Rs.51093

Cost of Car Rs.311278

Purchase:30/3/2002

Whether there will be LTCG or STCG ?

inderjeet singh chadha (partner) (32 Points)
Replied 17 June 2014

We are a partnership firm and recently sold capital assets of book value about 3 lacs and consideration is about 52 lacs, invested the proceeds of rs 50 lacs in Bonds of rec, now for the purpose of income tax return what value is to be taken as purchase of these disposed assets, (our purchase value 18 years back was about rs 15 lacs and assets were added later on also now book value stands at rs 3 lacs). And value of balance assets is about rs 45000/= (depr calculated on balance assets which is about rs 8500/+

kindly let us know the position as per income tax the value to be taken as acquisition and improvement sale expense is say 10000/=

assets include plot building and used machinery.

thanks

inderjeet

purusothaman (Accounts Executive) (48 Points)
Replied 27 June 2014

Dear sirs,

may i know how to maintain the fixed assest register with sale of assest ..

kindly do needful

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umar shah (accountant ) (14 Points)
Replied 15 September 2015

Dear Pradeep Please Provide to us a format of depreciation sale of fixed assets also mention in this format

Sneha (Manager) (21 Points)
Replied 14 April 2016

I had purchased a property in 82-83

Today writeno down value is abt 6000

sd for 65 lacs I hav queries

am I entitled to capital gains how much tax hav I to pay Wat exemptions am I entitled to How can I reduce d tax liability which says 30% of profit sale less esbeda it was a disputed property for 30 years adv fees exp in property sale brokerage n Wat other exp wil help me reduce my tax liability plz guide ASAP