ADDITIONAL DEPRECIATION
U/s-32(1)(iia) of Income Tax Act 1961.
The Income Tax Department is an important department to collect revenue for nation development. Income Tax Department wants little changes as a policy "Give and Take", it means little benefits to get for Business Assessee and take advantages of revenue. In this part the Additional Depreciation benefits available for Business Assessee on some conditional points, which is as under:
Conditions for Claiming Additional Depreciation
- The assessee must be engaged in manufacturing or production of any article or thing
- "NEW" plant and machinery should be acquired and installed after 31/03/2005.
- It should be eligible plant and machinery.
- additional depreciation is not allowed in respect of BUILDING AND FURNITURE
- additional depreciation is not available in respect of OLD PLANT AND MACHINERY OR SECOND HAND ASSETS
- the word "NEW" STATED IN THE ABOVE CONDITION SHALL BE OF THE MEANING THAT ANY PLANT AND MACHINERY WHICH HAD NO EXISTENCE BEFORE OR BROUGHT INTO EXISTENCE FOR THE FIRST TIME..
LIST OF ELIGIBLE PLANT AND MACHINERY :
THE FOLLOWING ASSETS ARE NOT ELIGIBLE FOR ADDITIONAL DEPRECIATION..
- AIR CRAFTS AND SHIPS
- ANY MACHINERY OR PLANT WHICH ,BEFORE ITS INSTALLATION BY THE ASSESSEE WAS USED EITHER WITHIN OR OUTSIDE INDIA BY ANY OTHER PERSON
- ANY MACHINERY OR PLANT WHICH IS INSTALLED IN ANY OFFICE PREMISES OR ANY RESIDENTIAL ACCOMMODATION IN THE NATURE OF GUEST HOUSE
- ROAD TRANSPORT VEHICLE,HOWEVER "MOBILE CRAINS" USED QUARING OPERATIONS IS NOT FOR ROAD TRANSPORT PURPOSE HENCE NOT ATTRACTABLE TO ADDITIONAL DEPRECIATION
- ANY MACHINERY OR PLANT THE WHOLE OF THE ACTUAL COST OF WHICH IS ALLOWED AS DEDUCTION IN COMPUTING THE PGBP OF ANY PREVIOUS YEAR.
RATE OF ADDITIONAL DEPRICIATION :
Additional depreciation shall be available @20% of the actual cost of the machinery newly purchased if however the asset is put to use less than 180 days in the year in which it is acquired, the rate of depreciation shall be (50% of the rate 20%) i.e 10%
Assuming rate of depreciation for the block as 15%
Depreciation on WDV of P&M=1000*15/100=150
For Purchased New machinery Dep=(800-200)*(7.5+10)/100=105 (as p&m is used for less than 180 days in the py)
For Purchased Old machinery Dep=200*7.5/100=15 (ADDL dep not available for old mach)
Total dep=270 wdv at the end=1530
Points to be Noted:
I. It is allowable to all assesses engaged in the manufacture/ production of any article/ item/thing.
II. New Plant & Machinery should be acquired & installed after 31stMarch 2005:
- Additional depreciation is not allowable in respect of Buildings &Furniture or Old Plant & Machinery.
- The condition of Acquisition & Installation of Plant & Machinery should be satisfied simultaneously, on failure of which additional depreciation cannot be claimed on same.
III. Additional Depreciation claim is available only in case of Eligible Plant & Machinery, wherein all Plant & Machineries are eligible except the following:
- Ships & Aircrafts; or
- Any machinery/ plant which is and Old/ Second hand.
- Any machinery/ plant installed in any office/ residential accommodation/ guest house accommodation.
- Any machinery/ plant whose total actual cost is allowed as a deduction in computing business income in any if one previous years.
IV. The rules of 180 days or above for calculating normal depreciation are applicable in case of calculation of additional depreciation.
