Buying property in a company's name

Dear sir

• yes you can claim depreciation on office premises @10%
  
  
  
• Under business there is block of asset concept so assets that are used by the tax payer in his business, the profit will be calculated by subtracting Wdv of asset at that time by sales consideration.
• if there is profit then it is treated as short-term capital gains under Section 50 of the Income tax Act & u will not get benefit of indexation.
• but u can save the tax on profit by investing in other property.

if u need any other help then u can take  phone consultation & I will solve all your queries.

please rate 5 & provide valuable feedback for improving my answer in future

Dear Sir,

Hope you are doing well !!

1. Yes, you can claim depreciation.

2.According to section 50 of Income tax act if an assessee has sold a capital asset forming part of block of assets (building, machinery etc) on which the depreciation has been allowed under Income Tax Act, the income arising from such capital asset is treated as short term capital gain.

3.The original purchase price of the asset, minus all accumulated depreciation and any accumulated impairment charges, is the carrying amount of the asset. Subtract this carrying amount from the sale price of the asset. If the remainder is positive, it is a gain. If the remainder is negative, it is a loss.

4. No, you will not get indexation benefits.

It is advisable to take a phone consultation for detailed discussion.

Hi,

First of all there is nothing called proprietorship company. Either it will be company (private or public) or it will be proprietorship. 

Further, irrespective of the above, you can claim depreciation if you are using the office for business purposes. However, when you sale any depreciable asset, it is deemed to be short term capital gain (i.e. sales - written down value of asset). Written down value of asset means cost minus depreciation claimed till date.

no indexation benefit will be available in your case since its considered as short term capital gain.

Either you are having a proprietorship firm or one person company?

In both cases you can claim depreciation on it @10% every year.

When you sell you need to definitely pay capital gain on same which shall be short term capital gain always and cost shall be WDV as shown in books and capital gain needs to be paid only if block becomes Nil or sale price is more than cost.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you

Hello,

Yes, the proprietorship entity would be able to claim depreciation as an expense against the income.

On the sale of such property, STCG Short Term Capital Gain would be applicable. The Cost would be the carrying amount of the property in the books (after depreciation). No Indexation benefits would be available.

I hope this answer satisfies your requirements. 

Regards,

CA Hunny Badlani

- Yes you can claim depreciation on the premises used for the office purpose.

- If it will be a single asset in a block of assets then the gain will be short term capital gain which will taxable at normal slab rate. No indexation benefit in case of STCG.

- You can avoid STCG if you purchase another office during the same previous year i.e. in the year of sale. The gain from sale of first office will be treated as business income.

Income from proprietorship is taxable as individual's income (wife's income). Depreciation on it can be claimed when preparing P&L for the proprietorship business.

If the office is sold capital gain/ loss can arise on sale. This will be taxable in your wife's hands. The cost of office will be calculated after allowing indexation benefits.

Hello Sir,

Here is my reply to your query:

As per the details provided by you, in case the asset is purchased in the name of the company, then depreciation will be allowed on it.

At time of sale,  the Cost of Acquisition of the asset will be equal to the Purchase Value of the Asset less Depreciation claimed.

Thanks and Regards 

Divya Chugh