Capital Gain Tax on Depreciable Assets

    Posted By : Devashish / Published on : 14-Sep-2017 10:24 PM / View : 276 / Comment : 1
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    When a Company purchases Capital Assets, then it charges Depreciation on such assets (allowed under Companies act as well as Income Tax act) but when Company transfers this Assets to its Director/Employee at less than book value or at Nil value, Please elaborate tax implications under Income Tax Act??
    Read more on : assets depreciable gain capital

    • Depreciation allowed under Income Tax Act, 1961 becomes Taxable as Short Term Capital Gain or is allowable Deduction as Short Term Capital Loss if such Assets is sold at more than/less than its' Book Value.

      But If such Assets is transferred to Directors/Employees then it will be treated as Deemed Dividend (if transferee is also a Shareholder in Company) [u/s 2(22)(e) of Income Tax Act]. Or, It may be treated as Perquisites in lieu of Remuneration/Salary and will be added to Income in the hand of Directors/Employees.

      It should be disclosed as Related Party Transaction in the Auditor's Report

      16-09-2017 / 05:23:05 PM
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