Capital gain taxation
RD
(Querist) 11 July 2012
This query is : Resolved
Kindly advice on the following:
1.A Private Limited Company had purchased a Factory (Land + Building) in the year 2002-03.
2.From that your onward it has claimed depreciation on the entire amount as it had not separated the value of land.
3.Now, in the current Financial Year – that is – in 2012-13 it has sold the aforesaid Factory.
4.Now the Question is whether the company can segregate the value of Land and Building from the sales consideration received and claim Capital Gain on Sale of Land as Long Term Capital Gain after taking the benefit of Indexation? The Company can have Valuation Report – both – at the time of Purchase as well as Sales.
5.And if it can do so as mentioned above, what would happen to the Depreciation allowed on the value which includes Land?
6.And Lastly will the Income Tax Department invoke Section 50 on the entire amount, as Depreciation has been allowed on the entire value of Factory, and would not allow the claim of Long Term Capital Gain on Sale of Land.
Kindly reply ASAP along with relevant Judicial Pronouncements.
Thanking in Advance
C. P. CHUGH
(Expert) 16 July 2012
Land is never depreciated irrespective of accounting and taxation treatment, by any assessee. Take advice of your tax consultant and you should succeed in claiming benefit of long term capital gains.
Adv C P Chugh
cpcservices@gmail.com
91+99711-24526
