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Sale of Plant & Machinery & Query of TDS on Remuneration

RAJ (CA) (120 Points)

08 February 2010

1.) An consultant renovated his office & bought all below new equipments in exchange of old

Sold A.C W.D.V :- 72,000/- Sold @ 84,000/- & bought new A.C's worth Rs. 1,45,000/-

Sold Old Computers W.D.V:- 56,000/- @ scrap Rs. 24,000/- & bought new computers @ Rs. 85,000/-

Furniture W.D.V : - 23,500/- @ scrap Rs. 25,000/- & bought new Furniture @ Rs. 75,000/-

Is the gains above W.D.V taxable?

As some of the items were exchaged should we directly show the differential value as new asstes purchase value?

2.) Should Upgradation of computers like replacing old monitors with LCD, upgrading the Ram, HDD treated as renvenue Expenditure like Repairs & Maintenance.

3) The Consultant (individual) hire individuals as consultants & pays Remuneration to them. Is he liable to deduct T.D.S?

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2 Replies

Amir (Learner) (4016 Points)
Replied 09 February 2010

Dear Raj,

1) I hope all the transactions of sale & purchase have fallen in one FY, othetwise CAPITAL GAIN WILL ARISE

Plant & Machinery

Block 1 - 15% (AC) =72,000 - 84,000 + 1,45,000 = 1,33,000 (Dep @ 15%* will be allowed)

Block 2 - 60% (Computers) =56,000-24,000+85,000 = 1,17,000 (Dep @ 60%* will be allowed)

Furniture & Fixture

Block - 10% = 23,500-25,000+75,000= 73,500 (Dep @ 10%* will be allowed)

* Note = Depreciation will be half of the ratementioned, if the new asset was put to use for less then 180 days

2) Regarding ur second question = One of the test to decide between "capital & revenue" is the enduring nature - if benefits from the assets are expected over a period of time - can be capitalized

3) Applicability of TDS will depend upon the fact whether in the previous year his gross receipts exceeds Rs. 40 Lacs in case he is carrying on Business & Rs. 10 Lacs in case he is carrying on Profession.