Dep on Asset costing less than 5000

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varun gupta (Querist)
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16 June 2009 Any asset costing for less than 5000 should be depriciated @ 100%. So, is it must to first capitalize and then provide dep or can the purchase amt be directed charged to P & L A/c? Will this rule apply both for Income tax & Companies Act or what?

CA CS CMA Srinivasan N

CA CS CMA Srinivasan N (Expert)
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16 June 2009 Hi,
The Schedule XIV Provides that
"Notwithstanding anything mentioned in this Schedule, depreciation on assets, whose actual cost does not exceed Rs. 5,000 shall be provided depreciation @ 100%."
"Provided that where the aggregate actual cost of individual items of plant and machinery costing Rs. 5,000 less constitutes more than 10 per cent of the total actual cost of plant and machinery, rates of depreciation applicable to such items shall be the rates as specified in Item II of the schedule."
So you have to Capitalize and provide 100% depreciation and in case of Plant and machinery you have to check the second criteria too..
rgds

varun gupta

varun gupta (Querist)
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16 June 2009 And wat abt dep under Income tax Act in same case?

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CA Anisha Ray

CA Anisha Ray (Expert)
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17 June 2009 In case of Income tax, U will have to add that asset in the Block to which it belongs, and then provide deprn. at the Block rate for Entire year, if the asset is purchased till 30th September and at half the rate of Deprn if it is purchased after 1st October.