Profit on sale of machinery
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
01 September 2013
A pvt ltd co. has total plant and machinery for Rs 5 crore. During May 2012, it sold a machine for rs 18 lakh which was purchase for rs 43 lakh in 1987. As the block of assets will not be nil, so there will be no tax under Income tax act. But please tell me how to account for the sale in books of account under companies act. As the wdv will be nil, there is profit on sale of rs 18 lakh. Will I have to pay tax on profit.
01 September 2013
you have to show book profit in your accounts on sale of machinery as usual..as there is no concept of block of asset under companies act
but under income tax act, there will be no profit..
calculate the depreciation accordingly..
while preparing computation for income tax, you have to disallow the profit on sale of machinery..
conclusion : no need to pay tax on sale of machinery but Due to application of MAT you might have to pay some Tax..
but under income tax act, there will be no profit..
calculate the depreciation accordingly..
while preparing computation for income tax, you have to disallow the profit on sale of machinery..
conclusion : no need to pay tax on sale of machinery but Due to application of MAT you might have to pay some Tax..
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