India - Income Tax Act 2010 - Saarc

1.263 CH. IV - COMPUTATION OF BUSINESS INCOME S. 41in business shall be deemed to be profits and gains of the business orprofession, and accordingly chargeable to income-tax as the incomeof that previous year.38[Explanation 1.—For the purposes of this sub-section, the expression “loss orexpenditure or some benefit in respect of any such trading liability by way ofremission or cessation thereof” shall include the remission or cessation of anyliability by a unilateral act by the first mentioned person under clause (a) or thesuccessor in business under clause (b) of that sub-section by way of writing offsuch liability in his accounts.]39[Explanation 2].—For the purposes of this sub-section, “successor in business”means,—(i) where there has been an amalgamation of a company with anothercompany, the amalgamated company;(ii) where the first-mentioned person is succeeded by any other personin that business or profession, the other person;(iii) where a firm carrying on a business or profession is succeeded byanother firm, the other firm;]40[(iv) where there has been a demerger, the resulting company.]41[(2) Where any building, machinery, plant or furniture,—(a) which is owned by the assessee;(b) in respect of which depreciation is claimed under clause (i) of subsection(1) of section 32; and(c) which was or has been used for the purposes of business,is sold 42 , discarded, demolished or destroyed 42 and the moneys payable 42 inrespect of such building, machinery, plant or furniture, as the case may be,together with the amount of scrap value, if any, exceeds the written down value,so much of the excess as does not exceed the difference between the actual costand the written down value shall be chargeable to income-tax as income of thebusiness of the previous year in which the moneys payable for the building,machinery, plant or furniture became due 42 .Explanation.—Where the moneys payable in respect of the building, machinery,plant or furniture referred to in this sub-section become due in a previous yearin which the business for the purpose of which the building, machinery, plant orfurniture was being used is no longer in existence, the provision of this subsectionshall apply as if the business is in existence in that previous year.]38. Inserted by the Finance (No. 2) Act, 1996, w.e.f. 1-4-1997.39. Explanation renumbered as Explanation 2, ibid.40. Inserted by the Finance Act, 1999, w.e.f. 1-4-2000.41. Inserted by the Finance (No. 2) Act, 1998, w.r.e.f. 1-4-1998. Earlier original sub-section (2)was amended by the Finance (No. 2) Act, 1980, w.e.f. 1-4-1981 and later on omitted by theTaxation Laws (Amendment and Miscellaneous Provisions) Act, 1986, w.e.f.1-4-1988.42. For the meaning of the terms/expressions “sold”, “demolished or destroyed”, “moneyspayable” and “due”, see Taxmann’s Direct Taxes Manual, Vol. 3.