Income Tax Act, 2025
Section 7: Ins. by Act 21 of 1998, s. 16 (w.e.f. 11998).
7. Ins. by Act 21 of 1998, s. 16 (w.e.f. 11998).
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(b) in respect of which depreciation is claimed under clause (i) of sub-section (1) of section 32;
and
(c) which was or has been used for the purposes of business,
is sold, discarded, demolished or destroyed and the moneys payable in respect 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 cost
and the written down value shall be chargeable to income-tax as income of the business of the previous
year in which the moneys payable for the building, machinery, plant or furniture became due.
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 year in which the business for the purpose of
which the building, machinery, plant or furniture was being used is no longer in existence, the provision
of this sub-section shall apply as if the business is in existence in that previous year.]
1* * * * *
(3) Where an asset representing expenditure of a capital nature on scientific research within the
meaning of 2[clause (iv) of sub-section (1), or clause (c) of sub-section (2B), of section 35], read with
clause (4) of section 43, is sold, without having been used for other purposes, and the proceeds of the sale
together with the total amount of the deductions made under clause (i) 3[or, as the case may be, the
amount of the deduction under clause (ia) of sub-section (2), or clause (c) of sub-section (2B), of section
35] exceed the amount of the capital expenditure, the excess or the amount of the deductions so made,
whichever is the less, shall be chargeable to income-tax as income of the business or profession of the
previous year in which the sale took place.
Explanation.—Where the moneys payable in respect of any asset referred to in this sub-section
become due in a previous year in which the business is no longer in existence, the provisions of this
sub-section shall apply as if the business is in existence in that previous year.
(4) Where a deduction has been allowed in respect of a bad debt or part of debt under the provisions
of clause (vii) of sub-section (1) of section 36, then, if the amount subsequently recovered on any such
debt or part is greater than the difference between the debt or part of debt and the amount so allowed, the
excess shall be deemed to be profits and gains of business or profession, and accordingly chargeable to
income-tax as the income of the previous year in which it is recovered, whether the business or profession
in respect of which the deduction has been allowed is in existence in that year or not.
4[Explanation.—For the purposes of sub-section (3),—
(1) “moneys payable” in respect of any building, machinery, plant or furniture includes—
(a) any insurance, salvage or compensation moneys payable in respect thereof;
(b) where the building, machinery, plant or furniture is sold, the price for which it is sold,
so, however, that where the actual cost of a motor car is, in accordance with the proviso to clause (1) of
section 43, taken to be twenty-five thousand rupees, the moneys payable in respect of such motor car shall
be taken to be a sum which bears to the amount for which the motor car is sold or, as the case may be, the
amount of any insurance, salvage or compensation moneys payable in respect thereof (including the
amount of scrap value, if any) the same proportion as the amount of twenty-five thousand rupees bears to
in respect of which depreciation is claimed under clause
of sub-section
of section 32;
and
which was or has been used for the purposes of business,
is sold, discarded, demolished or destroyed and the moneys payable in respect 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 cost
and the written down value shall be chargeable to income-tax as income of the business of the previous
year in which the moneys payable for the building, machinery, plant or furniture became due.
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 year in which the business for the purpose of
which the building, machinery, plant or furniture was being used is no longer in existence, the provision
of this sub-section shall apply as if the business is in existence in that previous year.]
1* * * * *
Where an asset representing expenditure of a capital nature on scientific research within the
meaning of 2[clause
of sub-section
of sub-section
of section 43, is sold, without having been used for other purposes, and the proceeds of the sale
together with the total amount of the deductions made under clause
3[or, as the case may be, the
amount of the deduction under clause
of sub-section
of sub-section
Where a deduction has been allowed in respect of a bad debt or part of debt under the provisions
of clause
of sub-section
of section 36, then, if the amount subsequently recovered on any such
debt or part is greater than the difference between the debt or part of debt and the amount so allowed, the
excess shall be deemed to be profits and gains of business or profession, and accordingly chargeable to
income-tax as the income of the previous year in which it is recovered, whether the business or profession
in respect of which the deduction has been allowed is in existence in that year or not.
4[Explanation.—For the purposes of sub-section
“moneys payable” in respect of any building, machinery, plant or furniture includes—
any insurance, salvage or compensation moneys payable in respect thereof;
where the building, machinery, plant or furniture is sold, the price for which it is sold,
so, however, that where the actual cost of a motor car is, in accordance with the proviso to clause
of
section 43, taken to be twenty-five thousand rupees, the moneys payable in respect of such motor car shall
be taken to be a sum which bears to the amount for which the motor car is sold or, as the case may be, the
amount of any insurance, salvage or compensation moneys payable in respect thereof (including the
amount of scrap value, if any) the same proportion as the amount of twenty-five thousand rupees bears to