1. Depreciation is allowed in respect of the assets owned by the assessee. .
The asset sold is not owned by the assessee. Specifically, at the time when the entry for depreciation is made in the Books of Account. . 2. Depreciation is allowed on the basis of WDV of the block at the year end- . When asset is sold during the year-No depreciation is allowed. This is compensated by allowing depreciation on the newly purchased asset. .
3. Let us take a practical example- . 3.1 An old computer/machine sold in April 2013 may fetch more price than the same computer/machine is sold in Feb 2014 due to the fact that it becomes older till Feb 2014. We can say that an older machine fetches lesser price. . 3.2 When any depreciable asset is sold, it fetches some value or consideration. This consideration has its indirect tax impact. Asset sold at higher price increases the tax liability, whereas asset sold at lower price reduces the tax impact. . 3.3 So can we say that- the price mechanism takes care of the depreciation aspect ? And due to the said analogy, no further depreciation is required to be considered as an allowance. .
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