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 )
Q7
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
View answer
Q8
Solve Q1 assuming he used the car for its business.
This is the only car owned by him
View answer
Now, capital gain will be computed as it is used for purpose of business or profession
Depreciation on car will be calculated as follows
| Name of Asset | 2011-12 | 2012-13 | 2013-14 | 2014-15 |
| Opening Value | 0 | 425000 | 361250 | 307062 |
| Add | ||||
| Purchases 180 days or more | 500000 | |||
| Purchase Less than 180 days | ||||
| Less | ||||
| Sales During Year | 400000 | |||
| Cl Value before Dep | 500000 | 425000 | 361250 | 0 |
| Depreciation | 500000*15%= | 425000*15%= | 361250*15%= | No depreciation as block cease to exist |
| 75000 | 63750 | 54188 | ||
| Closing WDV(after Dep) | 425000 | 361250 | 307062 | 0 |
| Capital Gain Computation | Year 2014-15 |
| Full Value of Consideration | 400000 |
| Less | |
| COA | 307062 |
| STCG | 92938 |
Note:-
Even though asset used for more than 3 years,still it will be a Short Term Capital gain as it is a depreciable asset
Q9
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
| CAR NAME | SOLD FOR | Date of Sale |
| ALTO | 210000 | 15-11-14 |
| DZIRE | 320000 | 04-05-15 |
Compute depreciation and Capital gain for 2013-14, 2014-15 and 2015-16
View answer
| Name of Asset | 2013-14 | 2014-15 | 2015-16 |
| Opening Value | 0 | 765000 | 471750 |
| Add | |||
| Purchases 180 days or more | 300000 | 0 | |
| Purchase Less than 180 days | 600000 | 0 | |
| Less | |||
| Sales During Year | 210000 | 320000 | |
| Cl Value before Dep | 900000 | 555000 | |
| Depreciation | 135000 | 83250 | 0 |
| Closing WDV (after Dep) | 765000 | 471750 | 0 |
| STCG(STCL) | -151750 |
Note:-
No capital gain in 2014-15 as block continues to exist
| Capital Gain Computation | Year 2015-16 |
| Full Value of Consideration | 320000 |
| Less | |
| COA | 471750 |
| STCG/STCL | -151750 |
Q10
Solve last question assuming Alto Car sold for 770000
View answer
| Name of Asset | 2013-14 | 2014-15 | 2015-16 |
| Opening Value | 0 | 765000 | 0 |
| Add | |||
| Purchases 180 days or more | 300000 | 0 | |
| Purchase Less than 180 days | 600000 | 0 | |
| Less | |||
| Sales During Year | 770000 | 320000 | |
| Cl Value before Dep | 900000 | 0 | |
| Depreciation | 135000 | 0 | 0 |
| Closing WDV (after Dep) | 765000 | 0 | 0 |
| STCG(STCL) | 5000 | 320000 |
Note:-Capital gain arises on 2014-15 as Selling Price is more than Opening Value +Purchases
No depreciation in 2014-15 as value of block is 0
However block also continues to exist
| Capital Gain Computation | Year 2014-15 | Year 2015-16 |
| Full Value of Consideration | 770000 | 320000 |
| Less | ||
| COA | 765000 | 0 |
| STCG/(STCL) | 5000 | 320000 |