Question on tax problem

Depreciation will be calculated as 15% on Rs. 75 Lacs

and 7.5% on Rs.10Lacs 

Because As per Income Tax act,Condition for allowability of depreciation are as follows:-

The following fundamental conditions need to be fulfilled to claim depreciation:

(1) The person claiming depreciation must be the owner or the co-owner of the asset;

(2) The asset must be(put to use) used in the business. If it is only partly used for business, depreciation would be allowable on pro-rata basis;

(3) The asset must be used during the relevant financial year. If an asset is purchased and put to use for less than 180 days, that is, on or after the first day of October, only 50 per cent of the normal depreciation will be allowed in that year. In the subsequent years however, the asset will be subject to depreciation at the normal rates.

So if an assessee buys a machine on 01-08-2010 but does not put it to use before 30-09-2010, he will be allowed depreciation at 7.5 per cent (instead of the normal 15 per cent) for the financial year ended 31-03-2011. The crucial date is the date of putting the asset to use.

Depreciation amount will be 1300000

fine answer by nitin but i would like to add there will be additional depreciation @ 20% for the new plant as per section 32(1)(iia)

agree with ashish..

Originally posted by : ashish gupta
	fine answer by nitin but i would like to add there will be additional depreciation @ 20% for the new plant as per section 32(1)(iia)

Right ashish but for claiming additional depreciation, we must take into consideration the entire case for satisfing conditions for additional depreciation.. Futher if addition depreciation is allowed the same would be allowed @ 10% as  asset put to use of less than 180 days

For Claiming Additional Depreciation following conditions need to be satisfied:                          

1          Assessee must be engaged in the manufacturing or production of any article or thing (priority/non priority sepecified in ELEVENTH SCHEDULE).                                                                                                                                        

2          New Plant or Machinery is acquired and installed after 31st, March 2005                                                                                                                                       

3          It should be eligible plant & machinery. The following are not eligible:                                                                                                                                           

a.   ships and aircrafts                                                                              

b.   any machinery or plant which is installed in any office premises or any residential accommodation, or accomodation in the nature of a guest house.

c.   any office appliances or road transport vechicle.

d.   any machinery or plant, the whole of the actual cost of which is allowed as deduction( whether by way of depreciation or otherwise)  in computing the income chargeacle under the head "Profits and gains from business or profession" of any one previous year.                                                                             

GREAT WORK NITIN