Ascertainment of Profit for Managerial Remuneration

This query is : Resolved

Priyanka Kataria (Delhi) (Querist)
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19 February 2011 when calculate of profit u/s 349 of the companies Act.profit from sale of immovable property of fixed assets of capital nature comprised in the undertaking or any of the undertakings of the company,unless the business of the company consists,whether wholly or partially of buying and selling such property or assets are NOT TAKEN WHILE CALCULATE NET PROFIT..and profit on sale of machinery is taken while calculate the profit.so can any one tell me why it is taken coz one side LAW prescribe that it should not be taken and on other hand it is added in NET PROFIT...pls clarify me..

Kumar

Kumar (Expert)
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20 February 2011 1.Some machinery and other movable assets are sold almost every year and new assets are acquired in their place, since the old assets have lived their useful life or new assets have arrived in the market which is more beneficial etc.
2.Whereas this is not the case with Immovable property or Undertakings.
Land once purchased and business established in that place is not shifted every year.
Similarly an undertaking say a particular line of business once established is not sold every year. For that matter to set up an undertaking and make it profitable itself takes few years.
3.Hence profit from sale of machineries is not excluded whereas profit from sale of undertakings and immovable properties is excluded.