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Is Additonal Dep. is allowed to be C/F

Avanish Soni ( ) (47 Points)

28 December 2009

A plant consisting of P1, P2 whose WDV on April 1 was 25 Lacs .

New Plant P3 accquried worth Rs. 10 lacs on 15 july

Plant P1 & P2 was sold for Rs. 34 lacs on 20 March

Now total Dep. for year is :

Normal Dep. : 100000*15% =15000

Additional Dep:.1000000*20% = 200000

Total Dep. 215000

Total Dep. Allowable 100000 (15000+85000) , Since WDV ceases to exist ,Dep. can't exceed WDV

My question is , if in next year again a new plant is accuried , can additonal dep. of 1.15 lacs which couldn't be claimed earlier can be provided this year

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3 Replies

@ CA. $ahar$h @ (Student) (338 Points)
Replied 28 December 2009

Dear friend,

According to section 32 depriciation is allowed only to the extent wdv is present. and unabsorbed depriciation is the depriciation which couldnt be absorbed or setoff with the profit of the business.since as per the problem since the wdv is nil so there is no addtional depriciation which could be carried forward.

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CA Manish K Dhoot (CA, B. Com, NCFM, CPCM) (5015 Points)
Replied 28 December 2009

Originally posted by : Saharsh 'Hellrokr'
	Dear friend, According to section 32 depriciation is allowed only to the extent wdv is present. and unabsorbed depriciation is the depriciation which couldnt be absorbed or setoff with the profit of the business.since as per the problem since the wdv is nil so there is no addtional depriciation which could be carried forward.

Agree,

1 Like

Amir (Learner) (4016 Points)
Replied 29 December 2009

Dear Avanish Soni,

COMPLETE DEDUCTION OF ADDITIONAL DEPRECIATION IS ALLOWED IN THE FIRST YEAR IRRESPECTIVE OF THE FACT THAT THE WDV HAS BECOME NEGATIVE

SINCE THE ENTRIRE AMOUNT ADDITIONAL DEPRECIATION IS ALLOWED AS DEDUCTION IN THE FIRST YEAR ITSELF SO NOTHING TO CARRY FORWARD FOR NEXT YEAR(S)

In ur case the Deduction on account of Depreciation (including Additional Depreciation) would be Rs 2,15,000/- and the opening WDV for Next year would be "NIL"

I CAN SUPPORT MY VIEW WITH A SIMILAR QUESTION IN DIRECT TAXES READY RECKONER - BY MR. SINGHANIA