Rule 8AC - Computation of short term capital gains and written down value under section 50 where depreciation on goodwill has been obtained

Short term capital gains on intangible asset blocks: excess depreciation reduction deemed as capital gains under section 43 rules.

Rule 8AC prescribes that for the previous year relevant to assessment year beginning 1 April 2021 the written down value of an intangible asset block and short term capital gains are determined by applying the reduction mechanism in item (ii) of sub-clause (c) of clause (6) of section 43 where goodwill attracted depreciation in the prior assessment year; any reduction exceeding the block's opening written down value (without that reduction) plus actual cost of intangibles other than goodwill acquired in the year is deemed short-term capital gains, while a block consisting only of goodwill that ceases to exist through non-acquisition gives rise to no gain or loss.