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Weather dep on construction value or on land value

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Querist : Anonymous

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Querist : Anonymous (Querist)
27 October 2016 Dear Semiors,
I have purchased the land Rs. 4256000/- for factory purpose hence i have passed accounting entry in my books i.e. Land Dr...4256000
To bank/cash...4256000

But now i have constructed factory on this land and spend Rs. 1246793/-

My query is...1) do i need to capitalized this construction cost with land....2) weather depreciation will be charged only on construction value or inclusive land value.....3) what is the percantage of depreciation as per IT act.

Thanks & Regards
Anil Mittal
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CA R SEETHARAMAN

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CA R SEETHARAMAN (Expert)
27 October 2016 1 Capitalise construction cost separately.
2 Charge depreciation on construction cost only.
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Querist : Anonymous

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Querist : Anonymous (Querist)
27 October 2016 Sir.
No dep is allowed on land as per IT act right,

Also tell me what is the percentage of dep on construction cost as per IT act.



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CA R SEETHARAMAN

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CA R SEETHARAMAN (Expert)
27 October 2016 Yes you are right no depreciation allowed on land. Rate of depreciation is 10%.
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KAVIRAJA ADDANGADI

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KAVIRAJA ADDANGADI (Expert)
27 October 2016 Land and buildings to be booked separately, only on building cost depreciation applicable.

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