Short Term/Long Term Capital Gain

[SITARAM AGRAWAL]

1. Pvt Ltd.Co. Closed business in the A.Y. 11-12.  No Business Transaction.

2. Co. Not dissolved.

3. Claimed depreciation up to 31-03-2010- Long Term Asset.

4. Depreciation Not claimed in the year -31-03-2011

5. Sales Long Term Asset in A.Y. 2012-13

6. Whether Taxable u/s.112 of Income Tax Act, 1961

Pl. Guide.

Thanks,

AGRAWAL SITARAM C.

[JOHN SHANNEL]

Dear Agrawal,

If depreciation is claimed for an asset then it is taxable as Short term Capital gain. But the Short Term Capital Gain can be adjusted against Long term Capital gain as per judgement given by tribunal in Manali Investment.

Please refer section 50, 50A, 50B.

Regards

John Shannel

[malhar shenoy]

Depreciable Assets of a company / Business if sold are deemed  as Capital Gain arising from Short term capital gain.

It will be Subject to section 50 , if they have remained in Block of assets for A.Y 2011-12.this will make no difference even if  no depreciation is claimed for year ended 31/03/2011, since it is depreciable asset in the Block.

It will be taxed to Normal tax provision & not u/s 112 even though it is long term capital assets .

Based on court judgement one can avail section 54 EC.

 

 

AI Summary

Tax Treatment of Asset Sale in 2012-13: Depreciation Affects Capital Gains Classification Under IT Act Sections 112, 50, and 54 EC. A private limited company ceased business operations in the assessment year 2011-12 but was not dissolved. The company claimed depreciation on a long-term asset until March 31, 2010, but not in the following year. The asset was sold in the assessment year 2012-13, raising questions about its tax treatment under section 112 of the Income Tax Act, 1961. Responses clarified that if depreciation is claimed, the asset is considered a short-term capital gain, taxable under section 50, irrespective of the lack of depreciation claimed in 2011. However, adjustments against long-term capital gains are possible, and section 54 EC may be applicable.