11 June 2010
In my Company, a public limited company, a Electronic device is purchased for the factory use. It is a capital asset. It bought in 2008. But not put into use until today. Should I provide depreciation on that as per Companies Act, 1956? Further please clarify the depreciation treatment under the Income Tax Act, 1961.
11 June 2010
As per Sec 32 of It Act.. "Depreciation can be claimed on an asset if it has been USED for the purpose of business or profession during the last previous year.".......hence dep. will be available only if the asset has been put to use.. Put to use does not imply it has to be actually be used.
Also, Under IT act, Even if the asset is ready for its intended use then we can say that asset has been put to use and depreciation has to be calculated from the date of asset getting ready for its intended use.
Under Companies Act, depriciation is calculated on daily basis and there is no boundation for put the use of assets.
CAclubindia
