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Cost of asset for claiming depreciation

Nithish Kumar (Articles) (30 Points)

14 November 2021

Cost of asset Rs.75,000. The payment done were Rs.12,000 in cash on the date 20/10/2020 , Rs.13,000 in bearer Cheque on 25/10/2020 , Rs. 45,000 through bank on 27/10/2020 , and Rs.5,000 in Cash on 28/10/2020. What is the amount to be taken as Cost for calculating depreciation of asset????

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3 Replies

CA Aakarsh Jain (CA) (10216 Points)
Replied 14 November 2021

You can claim depreciation on Rs 75000 in your books of accounts but as per section 40A(3) of income tax depreciation will only be claimed on amount paid by bank i.e. Rs 45000.

Hope this helps.

4 Like

CA. Sourav Sarkar (Chartered Accountant ) (24578 Points)
Replied 15 November 2021

Depreciation should be claimed on 75000 rupees

sabyasachi mukherjee (26089 Points)
Replied 15 November 2021

As per Accounting standard and relevant guidelines , the cost of asset is the sum paid for accquistion of asset whether in cash or kind till the asset is put to use.
As a result of the same depreciation must be calculated on the accquistion cost till it is put to use.