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    Editing any part of the work sheet any affect calculation or hyperlink

    *WDV = Written down Value of block of asset

    DEPRECIATION

    RAHUL PODDAR

    1 Tax Provisions

    2 Block of Assets

    3 Asset Exist but No WDV*

    4 No Asset Exist but WDV* exists

    5 Building does not include Land

    6 50% Depreciation Case

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    7 Additional Depreciation

    8 Unabsorbed Depreciation

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    For claiming depraciation, an assessee has to fulfil the following conditions:

    > OWNERSHIP CRITERIA:

    The asset should be owned by the assessee. Where, however an assessee carries on business or profe

    not owned by him but taken on lease, he is entitled to deprection in respect of the capital expenditure inc

    by him on the construction of any structure or any work in relation to the building for improvement, renov

    or extension.

    > USE OF ASSET CRITERIA:

    Asset must be used for business. Where the asset is used partly for business and partly for personal pur

    reasonable proportion of the depreciation attrubutable to the business user of the asset is allowed.

    > ASSET ELIGIBLE FOR CLAIMING DEPRECIATION:

    TANGIBLE ASSETS >>>>>>>> BUILDING , MACHINERY , PLANT or FURNITU

    INTANGIBLE ASSETS >>>>>>>> KNOW-HOW, PATENTS , COPYRIGHTS, TRA

    acquired after 31-03-1998 LICENCES, FRANCHISES , SUCH SIMILAR RI

    NOTES:-1. Depreciation is available even in respect of a fractional ownership of an asset.

    2.Depreciation will be available whether the assessee has claimed, the deduction for deprecia

    while computing his total income.

    3.For Claiming depreciation under Hire Purchase , following points need to be satisfied:

    >> The agreement for hire purchase must show that as long as hirer discharges his o

    he has an uninterrupted rights over the assets for all practical purposes.

    >> The seller will eventually lose all rights, title & interest in asset once hirer fulfills its

    obligations.

    {

    D E P R E C I A T I O N

    Tax Provision u/s 32 of the Income Tax Act

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    sion in a

    rred

    tion

    ose, a

    RE

    EMARKS ,

    HTS.

    tion

    bligations

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    Section 2(11) defines 'block of assets' to mean agroup of assets falling within a class of assets.

    A taxpayers may have 13(Thirteen) different bloack of assets as given below:

    Block

    1

    2

    3

    4

    5

    6

    7

    8

    9

    10

    11

    12

    13

    Plant & Machinery - Containers made of glass or plastic used as refills, plant and machinery

    which satisfy conditions of rule 5(2) and new commerica; vechicle which is acquired during

    Janyaru 1, 2009 and September 30, 2009 and is put to use before October 1, 2009 for the purpose

    of business or profession

    Plant & Machinery - Computers including computer software. It includes books (other than

    annual publication) owned by a professional. It also includes gas cylinders, plant used in field

    operations by mineral oil concerns, direct fire glass melting furnaces

    Plant & Machinery - Energy saving devices; renewal energy devices, rollers in flour mills; sugar

    works and steel industry

    Plant & Machinery - Air pollution control equipment; water pollution control equipments; solid

    waste control equipments; recycling & resource recovery systems; wooden parts used in artifical

    silk manufacturing machinery; cinematograph films; bulbs of studio lights; wooden match frames;

    some plants used in mines,quarries,and salt works; and books ( being annual publication) owned

    by assessee carrying on profession or books (may or may not be annual publication) carrying on

    business in running lending libraries

    Intangible Assets - Know how, patents, copyrights, trade marks, licences, franchies and any other

    business or commerical rights of similar nature

    Furniture - Any furniture/fittings including electrical fittings

    Plant & Machinery - Any plant or machinery (not covered by bloack 6,7,8,9,10,11 or 12) and

    motor cars ( other than those used in a business of running them on hire) acquired or put to use on

    and after April 1 , 1990

    Ocean-going ships, vessels ordinarily operating on inland water including speed boats

    Plant & Machinery - Buses, lorries, and taxies used in the business of running them on hire,

    machinery used in semi conductor industry, moulds used in rubber and plastic goods factories.

    Plant & Machinery - Aeroplanes

    Buildings -

    a. building acquired on or after September 1, 2002 for installing machinery and plant

    forming part of water supply project or water treatment system and which is put to use for

    the purpose of business of providing infrastructure facilities under clause (i) of sub

    section (4) of section 80-IA;b. temporary erection such as wooden structures

    block of asset

    Buildings - Residential buildings other than hotels and boarding houses

    Buildings - Office, factory, godowns or buildings which are not mainly used for residential

    purpose [ covers hotels and boarding houses but does not cover those under block 1 and

    block 3 ]

    Nature of Asset

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    Rate

    5%

    10%

    100%

    10%

    15%

    20%

    30%

    40%

    50%

    60%

    80%

    100%

    25%

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    Opening value of block of Asset ( A & B) 80,000

    Add: Purchase of new plant C 30,000

    110,000

    Less: Sale of Plant A

    [plant A is sold at Rs. 180000 but the amount of 110,000reduction cannot exceed Rs.110000, the difference

    of Rs. 70000 is short term capital gain u/s 50(1)]

    WDV of block consisting of Plant B & C Nil

    In such case no depreciation is admissible where WDV has been reduced to zero

    through the block of asset exist on the last day of previous year.

    Asset Exist but No WDV

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    ILLUSTATION

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    Opening value of block of Asset ( A & B) 237,000

    Add: Purchase of new plant C 20,000

    257,000

    Less: Sale of Plant A, B & C

    [Block of Asset does not contains any Asset] 49,000

    WDV of block (empty) 208,000

    WDV of block for next year Nil

    In such case no depreciation is admissible as the block of assets cease to exist onthe last day of the previous year. Rs. 208000 will be treated as short term capital

    loss on sale of plants.

    Depreciated value of the block on the first day of the next previous year will be NIL

    No Asset but WDV Remains

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    ILLUSTATION

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    Building Does not include land

    Building does not include land it means the super structure . Where the sale deed does not indicate t

    land and building seperately , then the full purchase price is eligible for depreciation. But if the sale d

    indicates the price of land and building seperately then depreciation is available only for building.

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    e price of

    ed

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    Where any asset is acquired in the previous year and is put to use for the purpose of business or

    profession for a period of less than 180 days, then the depreciation in respect of such asset is allowable

    up to 50% of the amount calculated at the percentage prescribed.

    Month APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR

    Days 30 31 30 31 31 30 31 30 31 31 28 31

    DD MM YYYY

    1 12 2008

    Depreciation Status:

    Date of Purchase

    No of Day Used 120

    50% Depreciation

    Where asset is used for < 180 days

    DAY CALCULATOR

    Please change t

    whereever nec

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    e days

    ssary

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    For Claiming Additional Depreciation following conditions need to be satisfied:

    1

    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.

    c. any office appliances or road transport vechicle.

    d.

    Few points of considerations:

    1 Additional deprecation rate is 20% of the actual cost

    2 If asset put to use of less than 180 days then the rate will be 10%

    3 It is onlu available in the year when it is first put to use.

    ADDITIONAL DEPRECIATION

    Assessee must be engaged in the manufacturing or production of any article or thing (prio

    sepecified in ELEVENTH SCHEDULE).

    VIEW ELEVENTH SCHEDULE

    any machinery or plant which is installed in any office premises or a

    accommodation, or accomodation in the nature of a guest house.

    any machinery or plant, the whole of the actual cost of which is allo

    whether by way of depreciation or otherwise) in computing the incothe head "Profits and gains from business or profession" of any one

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    rity/non priority

    ny residential

    ed as deduction(

    me chargeacle underprevious year.

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    4. Tooth paste, dental cream, tooth powder and soap.

    6. Confectionery and cholocates.

    9. Cinematograph films [ wef 01-04-1989 excluded] and projectors.

    24. Safes, strong boxes, cash and deed boxes and strong room doors.

    27. Crown, corks, or other fittings of cork, rubber, polythyelene or any other material.

    28. Pilfer-proof caps for packaging or other fittings of cork, rubber, polyethylene or any

    other material.

    1. Beer, Wine and other alcoholic spirits.

    3. Cosmetics and toilet preparations.

    7. Gramophones, including record-players and gramophone records.

    10. Photographics apparatus and goods.

    23. Steel furniture, whether made partly or wholly of steel.

    25. Latex from sponge and polyurethane foam.

    ELEVENTH SCHEDULE AS PER INCOME TAX ACT

    2. Tobacco and tobacco preparations, such as , cigars and cheroots, ciagrettes, biris,

    smoking mixtures for pipes and cigarettes, chewing tobacco and snuff.

    5. Aerated water in the manufacture of which blended flavouring concentrates in any form

    are used. (For this purpose blended flavouring concentrates shall include synthetics

    essences in any form)

    22. Office machines and apparatus, such as , typewriters, calculating machines, cash

    registering machines, cheque writing machines, intercom machines, teleprinters.

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    1

    2

    3

    STEPS OF PRIORITY FOR SET OFF

    a Current Depreciation

    b Brought Forward loss

    c Unabsorbed Depreciation

    UNABSORBED DEPRECIATION

    Unabsorbed depreciation means the depreciation which remained unclaimed in the previous year bec

    profits, certain point in this regards as as follow:

    Depreciation unclaimed in the previous year is first allowed to set off from income chargea

    "Profits and gaings from businedd and profession".

    If the balance is still unabsorbed then it shall be adjusted with income chargeable under ot

    (except income under the head "Salaries") for the same AY

    If the balance still exists, then it can be carried forward to the subsequent assessment yea

    period.

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    ause of lack of

    ble under the head

    hers heads of income

    rs for indefinite