Gain on Disposal of Immovable Property

Q: An immovable property is sold for Rs. 20 (m). The cost of the said property was Rs. 10 (m). Accumulaed Depreciation is Rs. 1(m). What will be the tax gain?

Ans:

Consideration Recieved   10
WDV (10-1=9)                 09
Tax Gain                          01

According to Section 22(14) if consideration recieved on disposal of an immovable property exceeds the cost of the property, the consideration recieved is to be taken equal to the cost. Due to this provision of law, gain shall always be equal to the depreciation deduction claimed by the taxpayer, the maount of gain over and above the claimed deprecation will not be charged to tax. This provision is designed only to re-coup the amount of depreciation deductions claimed by the taxpayer.