CORPORATE TAX PLANNING

PROFITS & GAINS OF BUSINESS OR, PROFESSION

DR. BARUN KUMAR DAS(BKD)
MOBILE NO. : 9830895854

(I)Uses of Assets:
(i) Business assets for General business purpose –
u/s 32: Depreciation, Additional Depreciation.

(ii) Business assets for Specified business purpose –

U/s 35AD = 100% of cost of eligible assets (except Financial Instrument, Goodwill &
Land) allowable.

(iii) Business assets for Power Units –

(a) Depreciation under SLM on ‘Individual asset’ without additional depreciation
(b) Depreciation Under WDV method on ‘Block of Assets’ with additional
depreciation

(iv) Business asset for Scientific Research –

100% of eligible assets allowable as deduction as per Sec 35.

(v) Asset purchased for Specified purpose but used as business asset –
(a) Assets purchased for Scientific Research –
= To be included in the block of assets at the ‘NIL’ Value.

(b) Assets purchased for Specified business u/s 35AD (within 8 years) = (Cost of
assets – allowable Depreciation) to be treated as business income.

(II)Disposal of Assets:
Tax benefits are –
(i) Offsetting Short Term Capital Gains

(ii) Sale of assets used for Scientific Research:

(a) Sale after using as business assets –

included in the block at ‘NIL’ value.

(b) Sale without using as business asset-

(A) Lower of the following to be treated as Balancing charge u/s 41(3) –
(a) Sale proceeds + deduction allowed u/s 35 – COA
(b) Deduction allowed u/s 35

(B) There may arise Capital gains.

(iii) Sale of business assets by Power Units.

(iv) Sale of assets used for Specified business u/s 35AD – entire sale proceeds to be
treated as business income.
 EXERCISE

PROBLEM NO.- 1:

G. Ltd. , a manufacturing Co. furnished the following information:

(a) Projected Net Profit for the year 2022-2023 --Rs.2,10,000 (without considering depreciation
& STCG)
(b) Position of P & M :-- on 1.4.22 Rs.3L + purchases during ‘22-‘23 Rs.1.2L – sale Rs.5L[part of the
block] =80K (STCG)
(c) The Co. can arrange a fund of Rs.1.5L on 01.1.2023 in order to reduce the tax liability.
Advise G Ltd. and show the impact on profit and taxability.

PROBLEM NO.- 2:
H. Ltd. , a manufacturing Co. furnished the following information for the P/Y 2022-2023:

(a) Projected Net Profit for the year 2022-2023 --Rs.20,00,000

(b) Details of the block of P & M[15%] :--
WDV on 1.4.22- Rs.5L
purchased on 1.6.2022- Rs.3L
sold on 31.1.2023- Rs.9L [part of the block]
(c) The Co. can arrange a fund of Rs.4L and wants to invest in another new P & M either on 11.3.2023
or, 11.4.2023.
Advise G Ltd.which one is best according to tax savings point of view.