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If the person sells a capital asset that forms part of the block of assets on which depreciation has been allowed as per the provisions of the Income Tax Act, the income from such sales is a capital gain.
The calculation of capital gain or loss arising on the sale of depreciable assets can be divided into two categories:
Situation I
Computation of short-term capital gain:
Sale consideration | xxx | |
Less | Opening written down value of the block | xxx |
Less | Actual cost of any asset acquired during the financial year | xxx |
Short-term capital gain | xxx |
Situation II
Situation III
Computation of short-term capital loss:
Opening written down value of the block | xxx | |
Add | Actual cost of the asset acquired | xxx |
Less | Sale consideration | xxx |
Short-term capital loss | xxx |
Situation IV
Computation of short-term capital gain:
Sale consideration | xxx | |
Less | Opening written down value of the block | xxx |
Less | Actual cost of the asset acquired | xxx |
Short-term capital gain | xxx |
Note: Capital gain or loss on the transfer of depreciable assets is always treated as short-term capital gain or loss.