Please advice whether the capitalised portin of pre-operative expenses need to be deducted to arrive at the WDV in case of transfer of plant & machinery from one unit of a company to the another unit of the same company in the different state. And if the WDV is arrived at after deduction of pre-operative expnses whether the remaining undepreciated part of pre-operative expenses is allowable for deduction against current revenue.
11 February 2010
According to Sec 32 of Income tax Rules, 1961, it is given that any pre-operative or pre-installed expenses will be capitalized and will be eligible for Depreciation.
Same will be follow, even if asset is tranferring to another unit.
Means, there will not be any deduction available for pre-operative expenses and same will remain part of cost of machinery and eligible for depreciation only. (in this case, you can think about What happen in amalgmation case, there is no any separate deduction is available and will be eligible for depreciation purpose only)
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