Section 41(3) - Sale of Assets used for Scientific Research

Sale of research assets: surplus and prior research deduction may be recaptured and taxed as business income on sale.

Where a capital asset used in scientific research is sold without having been used for other purposes, any surplus of sale proceeds together with the deduction allowed under section 35 over the capital expenditure, or the amount of the deduction allowed (whichever is less), is chargeable to tax as business income in the year of sale; if moneys become payable in a previous year when the business no longer exists, the rule applies as if the business existed then, and the provision does not apply where the asset was put to other business purposes prior to sale.