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In case of normal business, there are Two types of assets

1. Assets like Stock in Trade

Sale of these is taxable under PGBP


2.Other Assets   like Machinery,Furniture etc

Sale of these is taxable under Capital Gains in some cases as mentioned below

1. Since depreciation is charged on assets capital gain is always short term.Also NO INDEXATION DONE on these assets

2. Capital gain is completed only in following cases

     (a) All the assets of block transfer (block comes to an end )

     (b) Some of the assets of block transfer but the selling price exceeds the value of block .

 In all other cases, only depreciation is computed on balance amount in the block

3. Cost of acquisition  =

 Opening value of block


Purchases during the year

(depreciation of the year is not be deducted )



Suppose Mr A purchased car for 5 lacs on 15/4/2011 for personal purpose
He sold the same for Rs 4 lacs on 20/09/2014
Calculate Capital gain

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Solve Q1 assuming he used the car for its business.

This is the only car owned by him

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Ajay & Co purchased 2 cars for its business

Name of Car Cost Date of Purchase
ALTO 300000 15-04-13
DZIRE 600000 25-10-13

It sold the same as follows

ALTO 210000 15-11-14
DZIRE 320000 04-05-15

Compute depreciation and Capital gain for 2013-14, 2014-15 and 2015-16

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Solve last question assuming Alto Car sold for 770000

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  1. Income Tax
  2. Income from Capital Gains
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CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 8 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .