Opinion - Letters to the Editor   

Tax reform

Sir, — A corporate tax reform that is urgently needed, particularly for the sick and smaller companies, is the treatment of the capital gain on the sale of depreciable assets not as deemed short-term capital gain but as deemed "business income" as used to be the case in the past. The provision of "short-term capital gain" under section 50 should be amended.

The present provision inadvertently operates very harshly in the case of sick companies, particularly those which have accumulated business losses due to which they are generally required to dispose of their depreciable capital assets. Under the present provision, gain on the sale of such depreciable assets is deemed to be short-term capital gain with the result that the past carried-forward business losses, if any under section 72, cannot be set off against such "deemed short-term capital gain". This results in an extra tax burden on the sick company when it is already loaded with the past business losses.

R.N. Lakhotia,

New Delhi

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