Question ID : 40539

Income Tax

Dear sir, We have sold first floor of our shop. for Rs 17 Lcas. The WDV of the shop in our books is Rs 3.97 Lcas . We have deducted Rs 17 lacs from WDV. The result Profit on it. Can we claim Remuneration out of it or not.

Answer ID : 80343

The resultant profit is a ST capital gain u/s 50 and shall not enter the computation of book profit making u eligible for remuneration.

Answer ID : 80356

I understand, the Assessee is engaged in Business and claiming Depreciation on Building (Shop) and also understand, the Assessee is Partnership Firm and you want to claim Partner's Remuneration. As per Section 50 of IT Act, if Sale consideration is exceeding (I) Expenditure incurred wholly in connection with transfer, (ii) WDV at the beginning o PY and (iii) actual cost of any asset falling within the Block Asset then, the same will be taxed as 'short term capital gain'. Hence you cannot claim Remuneration. However, as mentioned in (I) you can claim any expense wholly incurred for the purpose of sale or you may plan new block of asset as mentioned in (iii).

Answer ID : 80406

No. It is short term capital gain.It will not be considered while computing book profit.

---