WITHDRAWL FROM IDBI IDAS'1986 U/S 32AB
sanjiv batra
(Querist) 01 December 2009
This query is : Resolved
A COMPANY IS HAVING APP. RS.5, 00,000/- UNDER IDBI INVESTMENT DEPOSIT ACCOUNT SCHEME’ 1986 U/S 32AB OF THE INCOME TAX ACT. 1961. PLEASE CLARIFY THAT:-
A) IF IT WITHDRAWS THIS MONEY FROM IDBI BANK & CLOSE THIS ACCOUNT. WILL THIS WITHDRAWL BE TAXABLE?
B) CAN IT WITHDRAW NOW THIS MONEY FROM IDBI BANK FOR PURCHASE OF PLANT AND MACHINERY UNDER THIS SCHEME OR NOT & WILL TAX NOT BE PAYABLE, SINCE USED FOR SPECIFIC PURPOSE?
THANKS
SANJIV BATRA
Vineet
(Expert) 01 December 2009
As the company availed deduction u/s 32AB, that means the investment was made prior to FY 1990-91 and hence limit of 5 years prescribed in subsectin (5A) is over and the amount can be withdrawn.
As per provisions of sub section (6), if the withdrawn amount is utlised for specified expenditure of business as per terms of scheme, the same shall not be included in the taxable income.
If any business asset is purchased using the withdrawn amount, the same needs to be retained for 8 years from the end of year in which asset was purchased. otherwise, the proportionate part of cost of such asset relatable to deduction amount shall be charged to tax in the year of such transfer.
