Depreciation

The company has Rs.12 lacs as opening WDV as on 1st April, 2011. It buys a new asset on 1st Feb, 2012 for Rs.10 lacs and sells the new asset on 20th March, 2012 for Rs.8 lacs. What will be the depreciation as per IT Act?

(12lacs+10lacs-8lacs)*rate of depriciation as per IT act

Assumption:

The block from which the asset belongs is  exist

It is not a industrial undertaking

But the new asset is not in existance, then how can we calculate depreciation on that asset?

The Depreciation will be, suppose rate is 15% then:-

(Rs. 12 lacs - Rs. 8 lacs) *15% = a

Rs. 8 lacs *15%/2 (i.e. for half year) = b

Depreciation for the year = a+b

In income tax, block method is followed for depreciation, in which depreciation for indiviual assets does not matter. When you purchse a new asset, it will merge in block and when you sell, it will reduce from block of assets.

There is no identity for indiviual assets hence even sell in same month, the treatment will be same as mentioned above.

Then what about Rs.10 lacs amount, it will be added to the block value or not?

Sorry, by mistake i have written 8 lacs in calculation of amount b.

It will be 10 lacs. Rs. 10 lacs * 15%/2 = b

correct if i m wrong,hope fully it will resolve ur problem

DEPRICIATION WILL BE {1200000+1000000(.5)-800000}*15%