248. Terminal allowance under clause (iii) of sub-section (1) – Whether assessee is required to again write off amount equal to terminal allowance
1. Section 32(1)(iii ) provides for deduction, in the case of any building, machinery, plant or furniture which is sold, discarded, demolished or destroyed in the previous year (other than the previous year in which it is first brought into use), of the amount by which the monies payable in respect of such building, machinery, plant or furniture, together with the amount of scrap value, if any, falls short of the written down value thereof. This deduction is to be allowed only if such deficiency is actually written off in the books of the assessee.
2. The Board have examined the question whether in a case where provision for depreciation had been made in the books of account in excess of the depreciation admissible under the Income-tax Rules and consequently, the amount written off in the year in which the asset was sold, discarded, etc., is less than the deduction to be allowed under section 32(1)(iii), the amount actually written off only should be allowed or whether the amount arrived at on the basis of the written down value as per income-tax records should be allowed. The Board is of the view that so long as the assessee has been allowed depreciation as permissible under the Income-tax Rules, the assessee should not be required to again write off an amount equal to the terminal allowance he is entitled to under the provisions of section 32(1)(iii) and deduction as permissible under the said section may be allowed.
Circular : No. 212 [F. No. 202/84/75-IT(A-II)], dated 26-2-1977
