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Balancing charge

Kinjal Roy (Chartered Accountant) (132 Points)

25 June 2013

Is Section 41(2) applicable when the money payable is in excess of WDV of the Block of Asset or it is in excess of WDV of the Individual Asset? The question has come up since Section 41(2) does not mention WDV of block of asset while Section 50 mentions WDV of block of asset.

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5 Replies

CA Momin Owais Ahmed (Audit Manager) (154 Points)
Replied 25 June 2013

Section 41(2) is applicable to block of Asset,

If sale value of one Asset is more than its WDV but less than WDV of block of Asset then there is no question for Balancing Charge, It results into Decrease of WDV of the Block

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Kinjal Roy (Chartered Accountant) (132 Points)
Replied 26 June 2013

Thanks Momin for the reply. However, as per Section 50, if the full value of consideration (considering it to be the moneys payable) exceeds the WDV of the block at the beginning of the year, then such excess is chargeable to Short term Capital Gain. Then what is the use of Section 41(2). You cannot tax twice the same amount under different heads in a single previous year.

Kinjal Roy (Chartered Accountant) (132 Points)
Replied 28 June 2013

Kindly help me out in this regard as it is holding up my tax audit for a client.

CA Momin Owais Ahmed (Audit Manager) (154 Points)
Replied 04 July 2013

Extremely Sorry for the late reply,

Section 41(2) deals with Assets of Power Generation Plants where Depreciation has been claimed on SLM Basis,

In your Case Section 50 will apply.

Kinjal Roy (Chartered Accountant) (132 Points)
Replied 05 July 2013

Originally posted by : CA Momin Owais Ahmed
	Extremely Sorry for the late reply, Section 41(2) deals with Assets of Power Generation Plants where Depreciation has been claimed on SLM Basis, In your Case Section 50 will apply.