SLM Method for Power Generation Units

This section is for

Power Generation  Unit

or

Power Generation and Distribution Unit 

Method Available

They can choose

Normal WDV Method

   OR

Straight line Method

2 This option was excercised

For existing units:-Those prior to 1.4.1997 had to exercise option before dnue date of ITR of AY 1998-99

For New Units:- before due date of ITR when it begins to generate power

Option once exercised cannot be changed later on

Important Points 

• Concept of block of assets applicable for power generation units also
• Additional depreciation also available to power generation unit
• However Investment Allowance scheme not available to thm

Sale of Assets

1. In case WDV method opted, it will be done same as it is done for normal assessee
2. In case SLM Method followed:-

• If Selling price is less than WDV Value, difference is written of as terminal depreciation
• If Selling Price > WDV (but less than actual cost),then difference is PGBP Income u/s 41
• If Selling Price>Actual Cost ,then
  • Actual Cost Less WDV is treated as PGBP
  • Selling price less Actual Cost is LTCG/STCG

Q1

Suppose a power generation units had the assets as mentioned below

Original Cost=100 lacs

Current WDV=70 lacs

What will be treatment if

1. Assets Sold for 62 lacs

  2.Assets Sold for 90 lacs

3.Assets Sold for 105 lacs