Non Moving stock sold off as scrap

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Neelaprashantk (Querist)
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08 October 2009 Dear freinds,

Kindly help me with the tax treatment of -

Non moving stock of packing material lying with the company since long ( value runs into lacs ) . now decided to segregate the whole as good and not required. The latter to be sold off as scrap. Kindly give me the different methods of accounting this income as well as the respective tax treatments for the same.

Shyam Lal Naik

Shyam Lal Naik (Expert)
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08 October 2009 The diminution in the value of closing stock will automatically get reflected in the revenue account. There does not appear to be special tax treatment.

The sale proceed shall be included as an indirect income.

Sreedhar Atchutuni ACA,GradCWA

Sreedhar Atchutuni ACA,GradCWA (Expert)
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08 October 2009 Show the sale proceeds under other income in P&L a/c.

The profit and loss on such sale will get reflected in P&L a/c.

The same will be taxable as business income.

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