M/s. Aditya Traders, a sole proprietorship concern, owns four machines that were first put to use for business purposes in March 2024. The…

Computation of depreciation for A.Y.2025-26 Particulars ₹ W.D.V. of the block as on 1.4.2024 7,70,000 Add: Purchase of second hand plant during the year [In December, 2024] 6,10,000 13,80,000 Less: Sale consideration of old machinery during the year [In July, 2024] 10,00,000 W.D.V of the block as on 31.03.2025 3,80,000 Depreciation @ 15% but restricted to 50% thereon [Since the value of the block as on 31.3.2025 represents part of actual cost of second hand plant purchased in December, 2024, which has been put to use for less than 180 days, depreciation is restricted to 50% of the prescribed percentage of 15% i.e. depreciation is restricted to 71/2%. Therefore, the depreciation allowable for the year is 28,500 being 71/2% of 3,80,000] 28,500 (ii) In the given case, no capital gains would arise, since the block of asset continues to exist and some of the assets were sold for a price which was lesser than the written down value of the block as increased by the actual cost of asset purchased during the year. (iii) If the two machines are sold in July, 2024 for 15,00,000, then short term capital gains would arise, since the sale consideration is more than the aggregate of the written down value of the block at the beginning of the year and the additions made during the year. Particulars ₹ ₹ Sale consideration 15,00,000 Less: W.D.V. of the machines as on 1.4.2024 7,70,000 Purchase of second plant during the year 6,10,000 13,80,000 Short term capital gains 1,20,000