Hi...
what should be treatment in Income tax if an asset is totally destroyed and nothing is realised as scrap.
On plain reading of act it provides " Moneys payable in respect of asset of same block which are sold, demolished or discarded should be reduced from WDV ". moneys payable includes salvage value
does it mean that if nothing is realised then there should be no reduction from WDV and Company shall be claiming Dep. over the years for the it does not possess.
Do reply...........
if asset destroyed and nothing is realised as scrap , then there is two situations
no. 1) if the block has some other asset then the loss on destruction of asset is allowed by way of depreciation since nothing is reduced from the wdv of the block on destruction of asset.
no.2) if the block contain only 1 asset that is destroyed then the wdv of the block becomes zero and loss on destruction of asset is capital loss having no tax treatment
Karia Overseas
Ahmedabad
CA
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