Assets and Depreciation Chapter- 10
- The application of a business asset to personal use shall be treated as a disposal of
the asset by the owner of the asset at the time the asset is so applied. - Where a business asset is discarded or ceases to be used in business, it shall be
treated to have been disposed of. - A disposal shall include the disposal of a part of an asset.
(B) Acquisition of asset arises under the following cases:
S. No.
(1)Acquisition of assets U/S 75
(2)- A person shall be treated as having acquired an asset at the time the person begins to
own the asset, including at the time the person is granted any right. - The application of a personal asset to business use shall be treated as an acquisition of
the asset by the owner at the time the asset is so applied.
Example: Distinguish between disposal and acquisition of asset under the following situations.(a) Application of a business asset to personal use.(b) Application of a personal asset to business use.(c) Mr. Adnan sold a part of his business building for Rs. 1,000,000.(d) There in no demand of Product-A produced by M/s Azeem and Co. Therefore proprietor
discarded the machinery which was used in production of Product-A.(e) Factory building of AB and Co. was destroyed by earthquake.(f) Mr. Amir exchanged his business vehicle for machinery.Solution:(a) Application of business asset to personal use is treated as disposal of asset.(b) Application of a personal asset to business use is treated as acquisition of asset.(c) Disposal of a part of asset is treated as disposal of asset.(d) When an asset is discarded, it is treated as disposal of asset.(e) When an asset is destroyed / lost, it is also treated as disposal of asset.(f) In this case, there is a disposal of vehicle and acquisition of machinery.PURCHASE OF ASSETS THROUGH BANKING CHANNEL
Purchase of assets through banking channel (U/S 75A)
1) Notwithstanding anything contained in any other law, for the time being in force, no
person shall purchase-
a) immovable property having FMV greater than Rs. 5 million; or
b) any other asset having FMV more than Rs. 1 million, otherwise than by
a crossed cheque drawn on a bank or through crossed demand draft or
crossed pay order or any other crossed banking instrument showing
transfer of amount from one bank account to another bank account.
2) For the purposes of this section in case of immovable property, FMV means value
notified by the Board under sub-section (4) of section 68 or value fixed by the
provincial authority for the purposes of stamp duty, whichever is higher.