TAX DOUBT

CA ADITYA ZANTYE (BCOM CA CS PROFESSIONAL) (325 Points)

28 April 2011

The written down value of plant and machinery in the books of A ltd is 75,00,000 as on 1st april 2008,on which date,the installed capacity was 12000 tons.A ltd borrowed rs 10,00,000 @ 10%p.a from ICICI bank on 1.8.08 for purchase of new plant and machinery for extension of its existing business,which would increase its installed capacity to 13000 tons.The new plant and mac was purchased on the same date but was put to use only w.e.f 1.11.08 Compute the depreciation admissible u/s 32 for the A.Y 2009-10,assuming the applicable rate of depreciation on plant and machinery to be 15%

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mahak (student) (44 Points)
Replied 28 April 2011

op. WDV on 1.1.08 75,00,000

addition on 1.8.2008 10,00,000

value of blockon31.3. 2009 85,00,000

rate of dep 15%

dep amt. (75,00,000*.15)+(10,00,000*1/2*.15)=12,00,000

(Guest)

Computation of depreciation admissible under section 32

written down value as on 1/4/08 – 75,00,000 @ 15% 1125000

new plant and machinery installed

Cost of new plant and machinery 10,00,000

Add: interest for the period from 1/8/08 to 1/11/08

(i.e. for 3 months) being interest for the period

before the asset is first put to use = 10,00,000×10%×3/12 25000

Actual cost of plant and machinery 10,25000

Depreciation on actual cost of new plant and machinery

Normal depreciation = 10,25,000×15%×50% 76875

Additional depreciation = 10,25,000×20%×50% 102500

179375

Admissible depreciation for the year 1304375

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