Income tax treatment

Under the I-T Act we follow the block concept in resepct of calculating loss/profit from sale/disposal of FA.  So if the block ceases to exists then loss/profit on the block is calculated accordingly and offered for taxation u/s 50B of the I-T Act.

In your case  the WDV of the Bolero Jeep will be arived after deducting depreciation from the opening WDV of teh Jeep.  the insurance cover received will be credited to the Jeep account.

After recording the above transaction if the WDV ceases to exists then the loss whihc would be a Short term capital Loss or profit whihc would be a Short Term Capital Profit will be calcualted accordigly and offered for taxation.