Depreciable assets and goodwill follow special capital gains rules, with WDV substitution and short-term gain treatment on transfer.

Special provisions govern computation of capital gains on depreciable assets forming part of a block of assets. Where depreciation has been allowed, the written down value is substituted for cost of acquisition, and any excess of sale consideration over the opening WDV, transfer expenses, and cost of additions during the year is treated as short-term capital gain. If the block ceases to exist because all assets are transferred, the resulting gain is also treated as short-term capital gain. Goodwill is separately treated as not being a depreciable asset from assessment year 2021-22.

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