In case a machinery eligible for Addiitional Dep. u/s 32(1)(iia) acquired on 31.03.2010 is put to use on 31.03.2011, then what would be the additional depreciation rate for the P.Y. 2010-11 ? is it 10% or 20% ?
31 December 2011
Since acquired by the assessee during the previous year and is put to use during the previous year for the purposes of business or profession for a period of less than one hundred and eighty days in that previous year Additional Depreciation will be allowed @ 10% i.e. half of 20%.
31 December 2011
The condition of put to use for less than 180 days is applicable only in the year of ACQUISITION.
It is not applicable for subsequent years.
Second proviso to Section 32 reads as under:
Provided further that where an asset is acquired by the assessee during the previous year and is put to use for the purposes of business or profession for a period of less than 180 eighty days in THAT previous year, the deduction shall be restricted to fifty per cent of the amount calculated at the percentage prescribed.
So, restriction is only for the year of acquisition.
In the subsequent year, full depreciation shall be allowed even if the asset is put to use for less than 180 days.
31 December 2011
Section 32(1)(iia) states as below:
in the case of any new machinery or plant (other than ships and aircraft), which has been acquired and installed after the 31st day of March, 2005, by an assessee engaged in the business of manufacture or production of any article or thing, a further sum equal to twenty per cent of the actual cost of such machinery or plant shall be allowed as deduction under clause (ii)
and second proviso to clause (ii) of 32(1) states:
Provided further that where an asset referred to in clause (i) or clause (ii) 1 [or clause (iia)], as the case may be, is acquired by the assessee during the previous year and is put to use for the purposes of business or profession for a period of less than one hundred and eighty days in that previous year, the deduction under this sub-section in respect of such asset shall be restricted to fifty per cent of the amount calculated at the percentage prescribed for an asset under clause (i) or clause (ii) 1 [or clause (iia)], as the case may be :]
The asset in the question is acquired in the yr py 2009-10 and put to use in 2010-11.
1 thing is absolutely clear is that additional depreciation can be claimed on in the year of acquisition and not later.
If liberal view is taken, 10% additional depreciation can be claimed in PY 2009-10 and in no case 2010-11.
If strict view is taken for clause iia (which says asset must be acquired and installed) and proviso to clause ii (which says asset is acquired and put to use for less than 180), then no additional depreciation shall be allowable.
My view is Addl Depre at 10% available in previous year 2009-10.
In Income tax there is general law that without being put to use, no depreciation can be allowed on any asset. So, according to me no dep should be allowed for P.Y. 2009-10.
31 December 2011
You will not get any additional depreciation in any previous year. Criteria for availing additional depreciation.
New P & M should be purchased and put to use in the same previous year. For this reason due consideration is given while purchasing new P & M i.e. P & M are purchased with proper planning.
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