Where any Scientific Research Asset (on which 100% deduction claimed u/s 35) ceases to be used as Scientific research asset and is instead used in normal business as fixed asset, what will be the tax treatment of the above transaction?
(i) Will such asset be added to block of assets with actual cost u/s 43(1) being NIL, so that on its sale, any moneys payable be subtracted from its block; or
(ii) Will such asset be kept out of block and any moneys payable on its sale/transfer etc. be charged to P/L directly as recovery of earlier deductions/expenses u/s 41(1) ?
Thanks in advance.
Dear Sandeep Goyal
If a scientific research asset ceases to be used as scientific research asset and used in normal business operation then it will be added to relevant block of asset with the actual cost taken to be NIL (Actual cost is considered as nil by virtue of Explanation 1 to Clause 1 of Section 43).
And if that asset is sold in the future, the value of the block will be reduced by the sale value of asset.
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