Depreciation as per Income Tax Rules

This query is : Resolved 

20 August 2009

op. bal. of building 100000

before 30 sep :
sale 1000
purchase 2000

after 30 sep :
sale 3000
purchase 4000

whether depreciation will be charged on sale of 3000(after 30 sep) at 7.5% ?

plz also provide legal base of the answer !!

Ravish (Expert)
20 August 2009

No depreciation will be charged for the year as income tax prescribes the rate of 7.5% for assets purchased & used for 180 days or less & not on the sale of asset. In this case Rs 3000 will be deducted from the gross block of assets....Hope u r satisfied.

CA Binal Shah (Expert)
21 August 2009


Calculation wil be as under:

Op. Bal. 1,00,000
Add: Pur. 2,000 (before 30/09)
Pur. 4,000 (after 30/09)
Less: sale 4,000
Cl.Bal. 1,02,000

Unless & Until assets sold are out of new purchased,it is always assumed that assets sold are out of old assets.

In ur case, Cl.Bal. of 1,02,000/- consist of 2000 of new pur before 30/09,new pur after 30/09 & 96000/- from op bal.

So depn wil be charged @ 15% on 96000/- & 2000/- & @ 7.5% on 4000/-.

Hope u r cleared now.

CA Dron Bharadwaj (Querist)
21 August 2009

thank u very much !!!!

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