Assets Discarded

This query is : Resolved

jitesh (Querist)
Follow

09 September 2010 Dear Seniors,,

My query is if assets is discarded under accounts than what effect should be under Income Tax.

Situation:
One of the Company has capitalised expenditure on rented building on 2001.

Now in 2010 it wanted to discard the residual Net Block maintained under Companies Act.

My query is whether is should also Discard the same block under income tax???

Regards
Jitesh Tibrewal
3rd year Article

SANJAY TALATI

SANJAY TALATI (Expert)
Follow

09 September 2010 From the Querry , it appears that the Asset in Question is reflected as Building.
Under the IT Act, the Dep. is allowable on the basis of the Block of Assets and the individual item of asset loses its identity after the same is being put to use.

The sale value is to be reduced from the block of assets and the Dep. is to be counted on the balance.

As the Asset would be discarded, nothing would be realised except scrap value.The sale proceed is to be reduced from the Op. WDV + Add. in that Block of Assets and compute the depreciation on the resul;tant figure.