Capital gains in case of depreciable assets

Despite anything to the contrary in section 2's clause (42A), if the capital asset is an asset that is a part of a block of assets for which depreciation has been permitted under this Act or the Indian Income-tax Act of 1922, (11 of 1922), the following amendments shall apply to sections 48 and 49's provisions:-

(a) if, during the previous year, the total value of the evaluation received or accruing as a result of the transfer of the asset, along with the total value of the consideration earned or accruing as a result of the acquisition of any other capital asset included in the block of assets, exceeds the sum of the following amounts, namely:-

(i)   expense that is solely and completely related to such transfer or transfers;

(ii)  the block of assets' written-down value at the start of the prior year; and

(iii) any item included in the group of assets purchased during the previous year, and any excess is considered to be capital gains from the sale of short-term capital assets;

(b) When a group of assets ceases to exist as a group because every asset in that group was transferred during the prior year, the cost of acquiring that group of assets is the group's written-down value at the start of the previous year, increased by the actual cost of any asset within that group of assets that were acquired by the taxpayer during the previous year that failed to meet the criteria. It will be assumed that any income obtained or accruing as a result of such transfer or transfers represents capital gains from the sale of short-term capital assets. Get registration of 80g for your NGO.

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Any advance or other money obtained and retained by the taxpayer in relation to negotiations for the transfer of a capital asset on any prior occasion shall be subtracted from the cost for which the asset was acquired, the written-down value, or the fair market value, as applicable, in computing the cost of acquisition.

When the capital asset is an asset for which the taxpayer has previously been granted a deduction on account of depreciation, whether pursuant to this Act, the Indian Income-tax Act of 1922 (11 of 1922), any Act repealed thereby, or pursuant to executive orders issued during the period when the Indian Income-tax Act of 1886 (2 of 1886), the following adjustments will be made to sections 48 and 49's provisions:-

  (a) The cost of purchase of the asset shall be determined as the written down value of the asset, as described in clause (6) of section 43, as adjusted.

  (b) The cost of the asset's acquisition shall, at the option of the taxpayer, be the market rate value of the asset on the said date, as reduced by the quantity of depreciation, if any, allowed to the taxpayer after the said date, and as adjusted, where under any provision of section 49, read with sub-section (2) of section 55, the equitable market value of the property on the 1st day of April, 1974, is to be taken into account. One should have knowledge about tax exemptions.

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