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Depreciaton under Income Tax Act

P.L.SURYA PRABHA (CHARTERED ACCOUNTANT) (86 Points)

24 May 2010

In case of Company if additonal depreciation is not claimed in the current year but is claimed in the next year. i.e., if 100 is the cost of the asset and the addtional dep is 10 in current year which is not cliamed. What would be the WDV for the next year? will it be100 or 90?

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8 Replies

Shudhanshu Agrawal (Business) (2570 Points)
Replied 24 May 2010

Additional Depreciation as per Section 32(2)(iia) is provided one time on the actual cost of the asset and not WDV @ 20%.

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P-A-W-A-N (TAX - MANAGER AT GURGAON) (541 Points)
Replied 24 May 2010

Yes Mr. Shudhanshu is Correct

CA,CS, ICWA Inter MANOJ KEDIA (Working With Educomp) (99 Points)
Replied 24 May 2010

SOrry Mr Subhnasu Question asked is that if we have not claimed add dep then for next year cost of assets will be after add dep means in books it will be assumed that we have claimed add dep like ordinarly dep

Shudhanshu Agrawal (Business) (2570 Points)
Replied 25 May 2010

Originally posted by : CA,CS MANOJ KEDIA
	SOrry Mr Subhnasu Question asked is that if we have not claimed add dep then for next year cost of assets will be after add dep means in books it will be assumed that we have claimed add dep like ordinarly dep

According to me additional depreciation should not be deducted from Actual cost or WDV as the case may be. It is because additional depreciation is above 100% value of the asset. So it should not be considered as normal depreciation and should not be reduced from WDV.

Sunali (Learner) (1317 Points)
Replied 25 May 2010

Originally posted by : CA,CS MANOJ KEDIA
	SOrry Mr Subhnasu Question asked is that if we have not claimed add dep then for next year cost of assets will be after add dep means in books it will be assumed that we have claimed add dep like ordinarly dep

Correct..!!!!.Since as per the Proviso to sec 32..Depreciation is to be deemed as provided in the books even if the same has not been claimed by the assessee.

However..the issue is... if the Proviso applies in case of Additional Depreciation as well..!!!!

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Shudhanshu Agrawal (Business) (2570 Points)
Replied 25 May 2010

Originally posted by : Shudhanshu Agrawal
	Originally posted by : CA,CS MANOJ KEDIA SOrry Mr Subhnasu Question asked is that if we have not claimed add dep then for next year cost of assets will be after add dep means in books it will be assumed that we have claimed add dep like ordinarly dep According to me additional depreciation should not be deducted from Actual cost or WDV as the case may be. It is because additional depreciation is above 100% value of the asset. So it should not be considered as normal depreciation and should not be reduced from WDV.

I would like to correct myself. As per Section 43(6)(b) WDV means the actual cost to the assessee less all depreaciation actually allowed to him under Income Tax Act, 1961.

As in this all depreciation is mentioned so the WDV should be reduced by the additional depreciation amount also.

PRATEEK (ACA) (102 Points)
Replied 10 June 2010

ADDITIONAL DEPRECIATION CAN BE CLAIMED IF THE ASSESSE IS INVOLVED IN THE BUSINESS OF PRODUCTION AND MANUFACTURING OF ANY ARTICLE OR GOODS OTHER THEN THOSE SPECIFIED UNDER SCHEDULE 11 AND IT CAN ONLY BE CLAIMED IF A NEW PLANT AND MACHINERY IS PURCHASED AFTER 31/03/2005.

AN ADDITIONAL DEPRECAITION WOULD BE ALLOWED @ 20% ON THE ACTUAL COST OF THE PLANT AND MACHINERY AND @ 10% IF THE ASSET IS PUT TO USE FOR LESS THEN 180 DAYS(IN THE YEAR OF PURCHASE)