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Depreciation in companies act.

Priyanka Goyal (AUDIT & TAX CONSULTANT) (117 Points)

25 June 2012

Hi,

I want to know that in case of Income Tax act, when an asset is not put to use then Its depreciation is not taken and for the next year too if it is not put to use, by default we consider having been put to use. so depreciation should be claimed.

Is this correct??

then what is the treatment of similar case in case of companies act. "about not putting the asset into use"

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3 Replies

CA Sankalp Patwa (CA) (193 Points)
Replied 25 June 2012

Ms. Priyanka

Kindly notice the following extract from section 32(1) of the income tax act.

The asset should be actually used for the purpose of business or profession of the assessee.

Mere acquisition of the asset or put to use of it will not give you the power to claim the depreciation.

Here actually used shall be read as productive use of the asset.

Hence statement given by you seems to be wrong.

But in case of companies act depreciation should be charged from the date of acquisition itself because of the fact that AS 6 uses the words "efflux of time" in the definition of depreciation.

Kindly reply whether you are satisfied with the reply or not.

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Priyanka Goyal (AUDIT & TAX CONSULTANT) (117 Points)
Replied 30 June 2012

Thanks

By the words "put to use" i meant the same as u said "productive use only". I used the word because the same words are written in the book. So that 's why and what do u mean by "efflux of time".