The first one is whose right?
Sir, tell me one thing
The current year's expenses, we are talking about 2023
A different story of 2023 is going on
It has a different profit
It has a different depreciation
These people are adjusting among themselves that whatever
sales there will be we will manage the expenses from that
and bring profit and in that we will add depreciation
A different story of that is going on
He is living his life well
He is living his family well in 2023
You could not run your family well
You got saved
You cheated
You could not get minus here
It was a profit of 110 crores
You could not get minus
You said you want more
You became greedy
The man who is running his family he gave you a support
that you come and do this work and live with us
You are going to live in his house
So whose right will be first?
His or yours?
Sir, the first right will be of the one who has that house
So first in 2023 minus the depreciation of 2023
After that if any profit is saved if then do it from this
one then minus it
Minus it
You are going to live in his house because your house is
not getting completed
Sir, you should have finished your story here
Government is being kind to you that if you are not able to
take your expenses here then you can take it from next year
Why are you ruining his life by going to next year?
First let him finish his work
When his work is over he can take out his profit
Minus it
The right will be of the second number
The right of first number will be of the same person
Current year depreciation will be minus
Unabsorbed depreciation will be minus in second number
But one more case let's complicate it
Because I am a person of conspiracy
I don't enjoy until things get complex
Assume any year
Assume 2021
Let's do it
Here there was no net profit
After all adjustments there was net loss
Net loss was of 25 crores
The net loss here was of 25 crores
And Government gives you permission that if you have any
loss in any year then you can minus it
Minus it
Government gives you this permission
There are three cases
Your 2021 is of loss
Your 2022 is of unabsorbed depreciation
And in 2023 there is a different story which is supporting
all these
Now tell me what will be minus first
Unabsorbed depreciation or old loss or old unabsorbed
depreciation
The story is very mixed
It is very complicated story What will be minus first?
Government removed the confusion
Because there are genuine reasons
Genuine problems
In business there are usually bad times and good times
Government said if you have loss in next year
If you have profit in next year then don't disturb his
family
His next year family should not be disturbed
His current year profit and current year depreciation
What am I saying?
Current year profit and depreciation
Ok? Current year profit
Who should get the first right?
The person who owns that house
He should get the first right
Current year depreciation
Minus this first
Second You have loss
There is a genuine reason
Business loss
You will give second priority to that
Business loss
Second number
And third priority should be
Priority of unabsorbed depreciation should come which could
not be set off that year
So we keep this useless on third number and unabsorbed
depreciation will come
And here will come your current year profit on which you
have to pay tax
You will pay tax on this
Look What is this?
Order of set off
In this way we have to work
If we have business loss of old years
If we have unabsorbed depreciation of old years
In this way we have to work
Look at this
Should I go ahead?
Any fear? Any worry?
Keep your confidence
Topics are complex
But I will not let complex until I am alive
Sir, what did you say?
Son It is like this
Some relation has become yours and mine
According to that relation it is my duty to not let you
face any problem
This is what our book is saying
What is our order of set off?
Current year depreciation
Brought forward business loss and unabsorbed depreciation
Ok Come Next topic
It is a fun topic
You will enjoy
Keep enjoying
Tell me one thing
Our depreciation
On which asset we get depreciation?
We get it on the asset which we use for our business
For example
Car For example
Company director
What does he do?
Meetings Talks to clients
Secures new orders
Brings new orders
Ok Company's car
Company's car is running
Office is being used for purposes
So depreciation
Should we get it or not?
We will get it
It is being used for office purposes
It is being used for business purposes
But Suppose A player type person
His company made him a director
His intention was bad from the beginning
He worked hard all his life and studied
So that one day he becomes company's director and gets a
red color Ferrari
So that one day he gets it for business purposes
Which he will use for personal purposes
That boy worked hard and became company's director
He studied and got experience
He took classes from us
I know this because he was a student of our class
His name was Khiladi
He was a boy
He worked for 10-15 years and became company's director
As soon as he became a director
He showed his true colors
The car company gave him to meet the client
The time to meet the client was 12 am
He used to leave at 10 am with the car and at 10.15 am when
he used to leave the car at 10.15 am
His lover was waiting for him at the corner of the street
He used to say to his lover that Go for a long drive
Sleep with me
This was the person
Khiladi His name was Mr.
He picked up his lover drove the car for 2 hours and
reached at 12 am
Now tell me
Is this car being used for business purposes?
Show me the car
Khiladi No.
786 and the car number is 786
Is this car being used for business purposes?
No It is being used for personal purposes
Because he was a Khiladi type of person
He knew that one day someone will ask him that how long did
you drive the car for personal purposes and for business
purposes
According to me, I drove the car for 40% for personal
purposes and 60% for office
If I drove the car for 10 hours then 6 hours for business
and 4 hours for long drive with my lover
Go for a long drive
Sleep with me
We will party
Sleep with me
So in this case how much depreciation should the company
get?
Is the company's car being used for official purposes?
100%? No
How much is being used? 60%
So depreciation
How much should I get from this? 60% Very good answer
Very good
In this case you will get 60%
Remove all depreciation
Remove all depreciation 60% Allow it 40% Disallow it
In that case
If this person did his job honestly then the remaining 40%
would have been allowed
But what to do
His intention was like this
Let's go to the next topic
Come on
Next topic
Friends tell me one thing
Tell me one thing
In our country
In any country
If we want to develop
For that science and technology is very important
Very important
New inventions are very important
Till new technologies are not developed
How will I increase my productivity
New research and development
I will have to do
For example if I am a businessman
And today if I
I have an export house
Earlier we used to get labourers
We didn't have that many machines
Earlier we used to hire tailors
We used to hire tailors
Tailors used to prepare 100 shirts in a day
Then we thought of getting a machine
We couldn't buy that machine
We had bought that
One machine was like this
We were doing research on it
We called a few engineers
We told them to prepare a machine
Don't worry about money
We will pay you
Prepare a machine
Which in a day
If they can make 100 shirts
We can make 500 shirts
Prepare a machine like this
Engineer came
And worked on this project for 6 months
And after 6 months
In 7th month they developed a machine
Which gives productivity 500 shirts in a day
We can make 500 shirts in a day
15000 shirts in a month
They export everything
So sir 500 shirts
My capacity increased
My productivity increased
Productivity increased
So I will export
If I export
I will get dollars
The treasury of foreign exchange will increase
Our country will develop
I haven't removed the tailors
They are still working
But what is happening
My country is developing
I used to do productivity in 5 days
Now I am doing it in 1 day
Ultimately I am not getting electricity
Work is getting faster
Foreign exchange is increasing
I am earning dollars
Ultimately I will be able to pay taxes
Government is developing
Government motivates
Businessmen In technology, science, research and development
Spend some money
How will they motivate?
Will they motivate you at home?
Will they come to you at home?
Government says
If you spend
Don't worry
You won't get a deduction
Whatever you spend
Minus it in your profit and loss account
Whatever you spend
Minus it
We will allow you
All the expenses
What was the problem with depreciation?
We used to put depreciation on our own
But income tax used to add it back
Minus it
Government said
We won't do anything like that
Whatever expense you have
In science and technology
Minus it
We will allow you
Okay There are two types of expenses
One is revenue
Second is capital expenditure
Capital expenditure means
You bought a machine
And brought it
Installation and other expenses
What is revenue expense?
I am giving salary to the engineers
That is my revenue expense
Small materials are also being used
Some small parts are to be brought
Some wires are to be bought
To make a machine
That is revenue expense
Capital expense is
I am buying a machine
That is capital expense for me
There are two types of expenses
Revenue and capital
Government has also given this facility
If you spend
We will give you a minus
But if you
If you
If you give money to an institution
To a college
For scientific research
The money you give
We will take it as
Profit and loss
We will reduce your profit
Government is motivating
To spend on science and technology
Whether you
Make machines for yourself
Give salary to the engineers
Or you
Spend on an outside institution
In science and technology
Let's see
There are two cases
One is in-house research
You are making a machine
One is outside
Let's talk about in-house
It is a two minute topic
It will end
Come In-house research is going on
In-house One is revenue expense
Revenue expense
One is
Capital expense
Let's assume
My company is going on
Look It is also possible that
You are going to start your factory after two years
You are planning from now
You have started spending
On science and technology
You have started making machines
This is also a possibility
Another possibility is
You are spending on a running company
Both are possibilities
Let's take running
Let's take example of running company
Running is going on
What will you do on it?
Do you understand this much?
It is a simple thing
You will get 100% revenue expense
I have spent 5 lakhs on
Engineers salaries
You will get 100%
Capital expense
For example
The machine was so big
I had to make a room for it
It was so big
It was not coming in a normal factory
I had to make a room for it
What will I do in that case?
Capital expense
You will get 100%
But you will not get land
Why you will not get land?
Because It is also a possibility
You will not use land for scientific research
You will not use land for scientific research use it for
your personal or business purposes.
If you spend on land, you won't get any deduction.
But yes, you have built a building.
The cost of building the building, we will give you 100% in
the case of running business.
If you spend on revenue, you will get 100% salary value.
If you spend on capital, you will get 100%.
If you spend on land, you won't get that.
Look at the example of running business.
Is it looking good?
Show it to the director.
The year you spend, you will get the salary.
The year you spend, you will get the salary in 2023.
If you spend in 2024, you will get the salary in 2024.
Is the point clear?
Come to the second point.
Now the point is, I want to build a factory after 2 years.
But I do planning in advance.
So, if I want to build a machine after 2 years, then my
time will be wasted.
What I do better than this?
I will hire engineers right now.
They will work on the machine used in the factory.
They will develop a machine.
I will keep giving them salaries.
Although, my business has not started yet.
My business has not started yet.
But what is the expenditure?
It is in-house expenditure.
I have not given money to any outsider.
I am spending for my own factory.
It is all in-house expenditure.
But when is it?
Before the company is built.
It is before the company is built.
So, there are two types of expenditure.
Revenue and capital expenditure.
Is 100% allowed?
Yes.
We will allow 100%.
We will allow 100% here also.
Sir, when will you allow?
My company has not been built yet.
The company will be built after 2 years.
Very good question.
You asked me, what year will I get?
The year you start your business, that year you will get
this expense.
Whichever year you start your operations, for example, I
will start after 2 years, so when I will start after 2
years, then whatever old expenses I have done, but how much
old expenses? How old? Will I give 20 years old expenses
also?
For example, a machine has to be made from 50 years.
Should I give 50 years old expenses?
The government said, there are chances of fraud here.
What you have to do is, you have to give 3 years old
expenses.
This is 1, 2 and this is 3.
1, 2 and 3.
3 years old.
Means if your business has started today, then whatever
revenue expenses you had 3 years ago, and whatever capital
expenses you had 3 years ago, you will get their
deductions, the year your business started.
What are we doing till now?
We are spending on scientific research.
It can be in a running company, it can be when a company is
about to be built.
In both the cases, what can happen?
Revenue expenses, salary etc.
Small expenses or big expenses like building etc.
100% both will be allowed.
But remember, in both the cases, what you don't get is land
expenses.
You don't get the expenses of the land you bought.
Is the point clear?
Sir, what can be the second one?
You told me that you are spending on in-house.
Do you remember, I told you a while ago, that if you give
money to any institution for scientific research, or
statistical research, or any social research,
then you will get a 100% deduction.
The government is asking you to contribute for scientific
research.
If you give money to any external institution, like IIT or
National Laboratory, then you will get a 100% deduction.
Is the point clear?
If you give money to any external institution, then you
will get a 100% deduction.
The amount of money you give, will be deducted from your
Profit and Loss account.
100% deduction.
An asset worth 1 crore.
For example, I have spent capital.
You are giving a 100% deduction.
Even if you give a 100% deduction, then 1 crore will be
deducted from my Profit and Loss account.
Is the point clear?
An asset is made.
Now that an asset is made, should I get depreciation on it?
Tell me one thing, when I reduced the value of that asset
by 100%, by spending capital, I created an asset, and when
I reduced the value of that asset by 100%, then what was
the value of that asset?
It was 0.
I took an asset worth 1 crore.
I reduced it by 100% from my Profit and Loss account.
I gave a 100% deduction for scientific research.
Now what is the value of that asset?
Nothing.
You will not get a deduction for depreciation on it.
There is no need to get it.
Its value is not left.
Is this the point?
Suppose you sell that scientific research asset, will it be
taxable?
When I gave a 100% deduction, its value will be 0.
When you sell, no matter how much money you sell, for
example, you had an asset worth 1 crore.
I gave a deduction of 1 crore.
Now it will be sold.
For example, it is sold for 70 lakhs.
So compare how much deduction was given, and how much was
sold.
Was it sold for 70 lakhs?
Compare it with a deduction of 1 crore.
Whatever is less, will be taxable in your hands.
In your head, my dear.
The sale amount or the deduction amount, whichever is less,
will be taxable.
When will it be?
When that asset will be sold.
Which asset?
On which you had done a capital expenditure.
For what?
For scientific research.
How much deduction did you get?
You got a 100% deduction.
But you did not get a deduction on land.
Is this the point, friends?
Look, friends,
I have put a photo in it.
Who is he?
Brother, who is he?
This is a photo of a Swades movie.
In this, our actors,
Mohan Bhargav was their character.
So what was Mohan Bhargav doing here?
He was making electricity.
Can you see this photo?
He was making electricity.
If you see this picture, he was bringing electricity to the
village.
He did not have a company here.
But suppose, if he had a company,
and he was doing research and development for this.
Look, he has brought a pipe.
He has brought a pipe.
These are pipes.
And suppose, these people
were employed on a salary basis
to do research, to develop, to see how electricity will
come to this village.
Because I have to install my factory in this village.
If this was the case,
then the salaries they are getting,
and the expenses on the pipes,
they would have got a 100% deduction.
Is the point clear?
See,
the labourers are working.
They would have got a deduction of their salary.
This is the point.