Profit on sale of fixed assets

[Kanishk Manglik]

Respected faculty,

I have been very confused regarding taxability on sale of fixed assets. Now since we are preparing depreciation as per companies act , what happens if there is profit on sale of fixed assets. . Do we add the cap gain in net profit and then disallow it in computation of income and add the the profit that come out through income tax act. Just like we do with depreciation. or is there some other way ?

AI Summary

Understanding Capital Gains: Profit from Fixed Asset Sales Deducted from Business Income, Calculated Separately Under Capital Gain Provisions A participant inquired about the tax implications of profit from the sale of fixed assets, specifically questioning whether the capital gain should be added to net profit and then adjusted in income computation, similar to depreciation. The response clarified that the Written Down Value (WDV) under the Companies Act and the Income Tax Act often differs. For business income computation, profit from the sale of a fixed asset is deducted and calculated separately under capital gain provisions. In the Profit and Loss Statement, this profit is disclosed as 'Other Income,' contributing to the net profit.