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Sec 50

18 May 2018

I have honda car having wdv as on 1/4/2017 - ₹2,50,000 as per income tax act now I sold the car for ₹2,00,000 and now the remaining block of that asset is ₹9,50,000 can anyone explain me regarding Sec50 of income tax act......

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rama krishnan (12239 Points)
Replied 19 May 2018

This relates to block of assets. the WDV is Rs.2,50,000/- and the wdv of the block remains at 9,50,000/- . you have sold the sod car for Rs. 2, 00,000.

As per Section 50 the value of the car is to be taken at 10,00,000/- and the depreciation for the year is to be calculated on 10,00,000 and not 10 lacs.

How 8,50,000 has been arrived is old car WDV 200000 sold for 150000 loss 50,000 but the block has not been completely eroded therefore the loss is to be added to the new assets and so on.

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A B Kundu (Professional) (1422 Points)
Replied 19 May 2018

Sec.50 of the income tax act talks about the chargeability to capital gain tax regarding depreciable assets. Capital Gain tax will be attracted in either of the following two ways and the same shall be always Short Term Capital Gain/Loss -

1) The block of assets cease to exist

For E.g.: The block consists of 5 assets and you have sold all the 5 assets during the year, then the difference of Sale Prices of all the assets and the WDV woulb be the STCG/STCL.

2) Block of asset exists, but sale price of particular asset(s) relating to that block exceeds the WDV of such block

For E.g.: The block consists of 5 assets with WDV of Rs.10,00,000/- and during the year you have sold 1 asset out of those 5 at Rs.12,00,000/-. In this case the block exists with 4 assets, but the Sale price of that particular asset exceeds the WDV of the block , hence the difference between Sale price and the WDV would be treated as STCG.

In these two cases, no depreciation shall be claimed further under income tax calculation.

Hope this will help you to understand the section.

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