Depreciation under section 32

This query is : Resolved

bhushan gupta (Querist)
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29 April 2013 A private limited has a building having W.D.V. as on 31.03.2012 Rs 50 crore. on 30.06.2012 it has received earnest money(bayana) of Rs.20 crore against sale of building. However due to non payment of balance amount of sale consideration, company on 01.11.2012 forfeited the earnest money. Now how should be dealt this forfeiture in books of accounts for income tax purpose:
a) Whether it will reduce the w.d.v of building by Rs.20 crore and depreciation as per income tax would be taken on Rs.30 Crore.
b) Further whether depreciation would be taken at 50% of depreciation rate or 100% of rate because forfeiture is happened on 01.11.2012 beyond 180 days.

Please treat it urgent

VISHRUT

VISHRUT (Expert)
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29 April 2013 Following will be answers to your question :

(1)It will going to reduce your total block of assets by Rs. 20 Crores. And it will have impact on depreciation as well as assets value at the time of calculating capital gain.

(2) It will have no impact of 100% or 50% as the net block will be reduced and total depreciation will be charged for the full year considering such lower value.