Profit - short term capital gain

[GYAN JAIN]

My assessee is P ltd co , having Hotel building in books charged deprecition every year , sold the hotel building for Rs 10,00,000.00 but the value as per section 50 c comes to Rs 1250000.00 , and WDv in books was Rs 775000.00 whethr the peofit is Shrot term capital gain or otherwise , give me applicable cases

[DEV KUMAR KOTHARI]

Come with full facts. You have stated deprecaition charged in accounts, whetehr deprecation was actually allowed in IT Act? Whether cost of land is included or is separate? Even if deprecaiton is claimed wrongly on total cost, including for land then WDV of building can be considered as cost of construction less deprecation actually allowed. Becasue on land deprecation cannot be allowed. and even if it is allowed it is a mistake apparent from record. Computation of STCG on deprecaible assets will be u/s 50.S. 50C covers only S. 48, so stamp valuation of 12.50 lakh will not be relevant. Therefore in block of buildings ( excluding land) only actual sale value of building will be deucted. Capital gain on land will not be subject to S.50

AI Summary

Computation of short term capital gain on depreciable assets: stamp valuation does not override WDV-based calculation for buildings.
Sale of a depreciable hotel building must be computed under the rule for short term capital gains on depreciable assets, using the block of assets written down value and depreciation actually allowed; depreciation improperly claimed on land should be excluded. Stamp duty based valuation provisions do not override the specific depreciable asset computation, so the actual sale value of the building and correct WDV govern the gain on the building, with land considered separately.