Question ID :
39360
Asset partly shown as depreciable and partly as long term, whether capital gain would be short term
A Building is being sold which was used by the Seller for running a hospital and had taken depreciation in ITR from 1988 to 1996. After 1996 it was locked as they shifted to another place. From 2011 the sellar has given the building on rent to another individual.
Now he is selling this building, whether capital gain would short term or long term?
Posted by
Hunny Badlani
on
Aug 21, 2019
Filed Under
Capital Gains
Hi Hunny,
I understand from the facts that since 2011, the building is used as an investment asset and not as a business/depreciable asset. In such a scenario, the building would be treated as long term capital asset and accordingly, would be liable to long term capital gain as the building was held for more than 24 months (earlier it was 36 months). In order to take this position, the seller should not have claimed depreciation on that building in the ITR from the AY 2011-12 . It will strengthen this position if the seller has declared the rental income from the building under "income from house property" and shown in the financials as investment asset (if the seller is not a company). I further assume that letting out the building is not the business of the seller.
Posted by
ASHWIN RAO VARANASHI on
Aug 23, 2019