Mohd Pervez (Manager Accounts) (32 Points)
08 March 2023Hi All,
If we purchased an asset but did not put it to use, can we claim depreciation under Income Tax act or Companies Act?
Can you please help me to clear this doubt?
Thanks,
prasad Nilugal
( GST Practitioner & Accounts )
(14801 Points)
Replied 09 March 2023
Depreciation needs to be charged , even though Asset not to put in to use and kept ready to use and As per the income tax Act , you have to fulfil following conditions .
1) Assessee must be owner of the Asset
2) Asset must be used during previous year
3) Asset must be used for Business or profession purpose.
The use of asset may be active use or kept ready to use .
However there are certain Case laws , please go through
1) ACIT vs Victory Aqua Farm Ltd ( Honorable supreme court case)
2) CIT vs Express resort and Hotels ( H' ble HC)
3) CIT vs Sonic Biochem ( H' ble Bombay High court)
4) CIT vs Swastik Industries etc.
In Case you claim GST credit you Can not Claim depreciation as per section 16(3) of the CGST Act . please refer 16(3) of the CGST Act
Calculation of Deferred Tax if you are claiming Depreciation ( Depreciation as per Companies Act and Income Tax Act difference)
Refer AS 10 or Ind As 16 , whichever is applicable to you for more details.
Take others opinion as well.
Komal Barapatre
(210 Points)
Replied 09 March 2023
CAclubindia
