Unclaimed Depreciation in Income Tax Act

Page no : 2

khemraj (jaipur) (24 Points)
Replied 30 June 2011

im agree with vitrang sir

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Paras (Mcom,CA Final) (122 Points)
Replied 01 July 2011

to claim a carried forward depreciation assessee must file return mentioning the unabsorbed depreciation in the year in which it is related too. ,

Regards

Paras :)

RAJU (LEARNER) (1089 Points)
Replied 01 July 2011

Hi,

Sectio 43(6) has defined `written down value` which reads as below;

⁷²(6) “written down value” means—

(a) in the case of assets acquired in the previous year, the actual cost to the assessee;

(b) in the case of assets acquired before the previous year, the actual cost to the assessee less all depreciation actually allowed⁷³ to him under this Act, or under the Indian Income-tax Act, 1922 (11 of 1922), or any Act repealed by that Act, or under any executive orders issued when the Indian Income-tax Act, 1886 (2 of 1886), was in force:

⁷⁴[Provided that in determining the written down value in respect of buildings, machinery or plant for the purposes of clause (ii) of sub-section (1) of section 32, “depreciation actually allowed” shall not include depreciation allowed under sub-clauses (a), (b) and (c) of clause (vi) of sub-section (2) of section 10 of the Indian Income-tax Act, 1922 (11 of 1922), where such depreciation was not deductible in determining the written down value for the pur-poses of the said clause (vi);]

In view of above, I believe, the written down value for claiming depreciation would be the original cost of the asset.

CA Mohit jain (CA ) (51 Points)
Replied 01 July 2011

i m also agree with the view given by mr. vitrag s modi, but it is not favrable to go for rectification u/s 154 or revision u/s 264 if the amount of depreciation has not been in large. Its make your case too much complecated

C.A SHASHANK GOYAL (Chartered Accountant) (362 Points)
Replied 02 July 2011

HI, EVERYONE BY VIRTUE OF SECOND PROVISO TO SECTION 32 , IT IS MANDATORY TO CLAIM DEPRECIATION , IF IN ANY OF THE PERIOD IT HAS NOT BEEN CLAIMED THEN IT WILL BE ALLOWED IN CURRENT YEAR ONLY IN RESPECT OF WDV WHICH WOULD HAVE BEEN ARRIVED HAD SUCH UNCLAIMED DEPRECIATION HAS BEEN TAKEN INTO ACCOUNT .

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c.bakshi (practising company secretary) (3221 Points)
Replied 02 July 2011

I completely agree with Mr Vitrag and Mr.Deepesh...

unabsorbed dep. can be carried forward

Assessee can also apply under section 264 of the Act for Revision...

1 Like

CA.Harshil Shah (Finance Manager) (23 Points)
Replied 21 July 2012

this funda is cleared in all's mind that we can go for Section 154 Rectification for unclaimed depreciation but one more thing i add here if Tax audit report also not allow any depreciaition but we want to claimed by Section 154,

Allowed u/s 154 or not ?

If yes then releted High Court/Supreme court case laws !!

I need help urgently so thanks if you guys can help me out !!!!!!!!

Originally posted by : Deepesh Khatri

Lets differenciate between unclaimed depreciation and unabsorbed depreciation. Prima facei they may be the same, but technically there is a difference. In the first case, the assessee did not opt to claim depreciation; while in the latter case, the assessee did not have sufficient profits to absorb the depreciation allowable.

Here we deal with unclaimed depreciation.

Depreciation is allowed to each assessee compulsorily u/s 32. If the assessee does not claim the same, it is "a mistake apparent from record" and the AO has to take into consideration the depreciation while passing Assessment Order.

Since the AO did not do the same, the assessee cannot claim depreciation for previous years now. But what he can do is apply for rectification u/s 154 for Assessment Orders passed within last 4 yrs requesting the AO to consider depreciation while calculating PGBP.

Once the AO passess the Re-Assessment Order, consider the Opening WDV for AY 2011-12 to be Opening Block less Depreciation so allowed by the AO.

My view may be wrong, please wait for experts to reply.