Depreciation [Sec 38] – Assets not used/partly used during t

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Venkateswara Rao Sapare (Querist)
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27 June 2010 Depreciation [Sec 38] – Assets not used/partly used during the Previous Year

“If a block of assets not used at all during the P.Y. whether depreciation shall be allowed or not? “ is what Anshu Agarwal was asking on 27.06.2010, further Anshu came out with following lines:

section 32(1) states:-
...and used for the purposes of the business21 or profession...
in this regard, if asset not used during the year, no depreciation to be allowed.

“It says date of put to use.. As you mentioned that it is not used than no depreciation...” was what Mr.CA Shivang drawn from above lines.

How have the lines of Mr.Anshu Agarwal led Mr.CA Shivang to infer so? Something is missing here.

The words, “If a block of assets not used at all during the P.Y.”, encourage us to understand that the same was not used during the Previous Year, but was used in the previous years immediately preceding the previous year. I may be wrong in my understanding, Mr Anshu Agarwal, may come out with clarity about what really was expected to understand.

Now, if the particular block of assets was not put to use in the previous year, but was put to use immediately preceding the previous year, is enough, it is allowed to claim depreciation. – Unitex Products Ltd v ITO[2008] 22 SOT 430 (Mum), CIT v Bharat aluminium co.ltd [2010]187 Taxman 111 (Delhi).

Hope, I may have some clarity from both.

Shudhanshu Agrawal

Shudhanshu Agrawal (Expert)
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28 June 2010 I am able to find following point which were related to your discussion.

You all are discussing on the topic whether depreciation on block of asset should be allowed or not when it is not used for business or profession during the relevant previous year.

If im correct then let me know so that i can also be the part of the discussion. I know few points which may become beneficial for your discussion.