Please Help: Conversion of business asset to capital asset
Posted Date : 11-Jun-2014 , 12:53:20 pm | Posted By: CA Shraddha Vora
Category :
Income Tax | Answers :
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A building was used for business till 1986. Thereafter, no business activities were carried out absolutely. Also, no Balance Sheet, Income Tax returns were filed since then for last 27 years.
Whether it can be considered as capital asset since 1986 or it still needs to be considered as business asset and depreciation has to be claimed thereon?
- Meera |
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| Posted By : CA Abhay Agrawal |
13-Jun-2014, 02:13:34 |
| Hi Shraddha,
With reference to your query, I have provided my comments below:
1. Building will be considered as a capital asset even if it has not been used for business purpose. As per section 2(14) a "capital asset" means property of any kind held by an assessee, whether or not connected with his business or profession (with certain exclusions like personal effects, agricultural land etc.).
2. Depreciation cannot be claimed since the building has not been used for business purposes. As per section 32 depreciation is allowed on specified assets which are owned, wholly or partly, by the assessee and used for the purposes of the business or profession.
Separately, given the facts, you need to consider implications under income from house property in the form of notional rent for the building.
Do revert in case of further clarifications.
You can reach me at ca.abhayagrawal@gmail.com
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