Setoff of business loss with gain on depreciable assets

[SUDHAKAR SIVARAMAN]

Dear friends,

I have query related to Income tax. My client is having loss carry forward to the extent of Rs.1crore as business loss and Rs.5 lac as Unabsorbed depreciation loss. Next year he sold land and building for Rs.6.5 crore. Out of which building sale value Rs.4.5 crore.

Now my question is whether carryover unabsorbed deprecation loss can be setoff against gain on sale of building, since building is depreciable asset. Similarly whether business loss carryover can be setoff against this gain on depreciable asset and long term capital gain. Pls advice

AI Summary

Unabsorbed depreciation can be set off against any income, including capital gains on depreciable assets.
Sale proceeds attributable to a building forming part of a block of depreciable assets are treated as short-term capital gain; unabsorbed depreciation carried forward may be set off against any head of income, including short-term and long-term capital gains, whereas business loss carried forward cannot be set off against capital gains and remains available only against business income, subject to statutory carry-forward conditions and compliance requirements.