Rahul Bansal (Finalist) (35929 Points)
08 October 2009QUESTION
SECTION 41 ( 3 )
SALE OF SCIENTIFIC RESEARCH ASSET
X Ltd. purchases a scientific research asset on March 1, 2005 for Rs. 610000. If the research activity for which the machine is bought into business on November, 2006 ( market value = Rs. 230000 ) ; depreciation admissible @ 15%, what will be the amount of depreciation for the A/Y 2008-09 & amount chargeable to tax u/h PGBP if the asset is sold on April 6, 2007 for Rs. 190000 ?
CA Manish K Dhoot
(CA, B. Com, NCFM, CPCM)
(5015 Points)
Replied 08 October 2009
when Scientific research asset is purchsed then it is fully debited to P/L A/C.
when work is complete and then machine is used for business then it has 2 treatment :
1. Firstly bring that machine into the block of assets. the cost of such machine into the block will be NIL (because it is already debited to P/L A/C). now provide dep. on that block.
if machine is sold then sale price will be reduced from that block.
Balance will be Short term capital gain or WDV.
2. Sold machine without using for business - in this case full sale consideration will be capital gain.
So to reduce tax liability bring machine into block and then sold.
25 Hours GST Scrutiny of Return and Notice Handling(With Recording)
Survey, Search and Seizure under Income Tax Act 1961
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