Clause 40 - Deduction for terminal allowance. - Direct Taxes Code, 2010

Deduction for terminal allowance. 40. (1) A person shall be allowed a terminal allowance in respect of a block of assets, if,— (a) the block of assets has ceased to exist by reason of being demolished, destroyed, discarded or transferred during the financial year; and (b) the percentage specified in the Fifteenth Schedule for computing depreciation in respect of the block of assets is zero. (2) The terminal allowance referred to in sub-section (1) shall be computed in accordance with the formula— A + B - C Where A = the written down value of the block of asset at the beginning of the financial year; B = the actual cost of any asset falling within that block, acquired during the financial year; and C = the amount accrued or received in respect of the assets which are demolished, destroyed, discarded or transferred during the financial year together with the value of the carcass or the scrap, if any. (3) The terminal allowance referred to in sub-section (1) shall be treated as "nil", if the net result of the computation, thereunder, is negative.