Depreciation when assets

Page no : 2

CA Akshay Kumar Mishra (Chartered Accountant ) (1784 Points)
Replied 15 September 2010

depreciation can be claimed only from the date of put to use...

the term put to use means actual use of asset & it does not means making an asset ready to use.. in simply words, if asset is purchased & installed but it has not been used then no depreciation will b calculated ... further once used , it will be regarded as used forever....

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CA.G.Muguntha Narayanan (Internal Auditor at TVS Motors) (2195 Points)
Replied 15 September 2010

Dear Satish,

The concept of passive use or potential use shall be applied only in case of standyby assets (eg. Generators need not be used so long as power is there). In all other cases, depreciation cannot be claimed merely on the fact that the asset was ready for use. Pls refer CIT vs. YELLAMMA DASAPPA HOSPITAL (2007) 290 ITR353(MAD) CASE

If the machinery is not used, section 32 is not applicable. In view of the aforesaid decision, it is necessary that the depreciable assets should be actually put to use in the relevant financial year to ensure that the claim of depreciation is not denied.

As per companies act, its based on the no. of days

addy digit (student) (25 Points)
Replied 07 October 2010

depreciation can be claimed if the asset was put to use in the business...it doesnt matter if it wasnt used for even a single day.....as far a the "saving money", choice of depreciation does not affect cash flows and it only shifts income from one period to another- it doesn't change income. Further, it also simply shifts the type of income from one income line item to another.

Ajay Garg (CA FINAL) (101 Points)
Replied 27 December 2010

After all discussion, i have a query that suppose a company buy a computer on today but not transferred to concerned person who will be end user of such computer and store it in his store room for 3 months, after 3 months he transfer the computer to concerned person, so, depreciation should be calculated from THE end of 3 months or from buying date, FOR ACCOUNTING PURPOSE.

please give me justification as per AS 6