Question

The destruction of a capital asset by a casualty gives rise to a capital rather than ordinary loss.

Group of answer choices

True

False

Answer 1

The destruction of a capital asset by a casualty gives rise to a capital rather than ordinary loss.

The capital loss arise when there is sale or exchange of capital asset below it's cost or value.

Whereas the ordinary loss is other than capital loss or loss from normal business operations.

The Answer is False.

Reason: The capital gain or losses is recognised when there is sale or exchange of capital assets. Destruction by casualty can not be termed as sale of capital asset. Hence it is to be treated as ordinary loss.