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Rate Of Depreciation

Deepanshu arora (chartered accountant) (130 Points)

27 May 2010

Dear All,

Please clarify on issue,

Partnership firm which is using PDA Phones on which we were cliaming depreciation @ 60%. As per Asssessing Officer depreciation should be charged @ 15%. Please send urgently circulars and notifications and any other necessary material on this issue to put my work correct in front of department.

thanks

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11 Replies

CA AYUSH AGRAWAL (Kolkata-Pune-Mumbai) (26986 Points)
Replied 27 May 2010

AO is Right. Depreciation Rate is 15%.

and Regarding PDA Phones How Much Does it Cost?

If It is Nominal Amount Then May Fully Debited to PL Account.if >5000.

Anand (Chartred Accountant) (435 Points)
Replied 27 May 2010

Dear sir,

The Assessing officer is right.

The Depreciation rate of 60% is prescribed only for computer and computer's software (where the technology change is very fast and so these products become outdated very soon).

Many people are wrongly claiming depreciation @ 60% on computer accessories like fax,printer,scanner etc. which is not right as these are covered under the defination of machinaries and so the correct rate of depreciation should be 15%. Many a times this goes unnoticed by the assessing officer also.

The case with the PDA phones is the same because it is not included under assets classification "computer including computer software". So we are not eligible to claim depreciation on PDA phones @ 60%. The general rate applicable to plant and machinery will apply to it i.e 15%.

CA AYUSH AGRAWAL (Kolkata-Pune-Mumbai) (26986 Points)
Replied 27 May 2010

Dear Anand,

I Have Case Law For The Same For Claiming Depreciation @ 60% on Computer Pheripherials Like Fax, Printers Scanner etc.

Please Correct UR Self.

U Can Claim Depreciation @ 60& on Printer , Scanners Etc.

Deepanshu arora (chartered accountant) (130 Points)
Replied 27 May 2010

Dear Ayush please send me Circular No. for computer pheripherials

Thnks for reply

Vikram Soni (Student) (103 Points)
Replied 27 May 2010

AO is Right. Depreciation Rate is 15%.

and Regarding PDA Phones How Much Does it Cost?

If It is Nominal Amount Then May Fully Debited to PL Account.if >5000.

CA LOVELY ARORA (C.A. B.Com (H) Graduate) (2151 Points)
Replied 27 May 2010

Dear Deepanshu,

The Depreciation rate should be 15% for PDA Machines........ and as far as Fax, Printer etc. are concerned, it's quotion of law....... you may charge depreciation @ 15% or even @ 60%..........

Anand (Chartred Accountant) (435 Points)
Replied 27 May 2010

Dear Ayush

Thanks for updating my knowledge.

please quote the case law for the same.

Thanks.

Anand

Ramil (CA,L.L.B.) (Taxation) (147 Points)
Replied 28 May 2010

Dear friends

Mr. Ayush is correct that on the computer accessories (printers, fax etc.) ,the rate of depreciation will be 60% (not 15%) since income tax doesnot consider them in isolation , it considers them to be part and parcel of computer , so it stipulates 60% rate .A.O. too holds this view.

So far as pda is concerned then it would be taxed @ 15% since all plant and machinery which has not been classified separately then general rate of 15% be applicable.

here some users have said that if pda cost less than 5000 then it can be fully allowed. i want to corretc u people, income tax law doesnot consider the AS-6 ,(as-6 recommends entire amount to be chareged to p/l a/c if asset cost less than 5000) but income tax nowhere considers such view. Even asset cost less than 5000, normal depreciation rate shall be charged .

so u guys please update ur knowledge

1 Like

Sandeep Kumar (learner) (81 Points)
Replied 28 May 2010

Dear Ramil,

You are right, thanks for valuable knowledge,

NITIN JAIN (CA FINAL STUDENT) (42 Points)
Replied 28 May 2010

Dear,

Dep. @ 60% is allowed on Comuter and its Accessories ( like Software printer, fax ,etc.) but if any assets which have value less then 5,000, then income tax allowed that we can written off whole amount to p&l. but in case of PDA phone considerd as a telephone which is inclued in P& M Catagory.so A.O. view is right.

Shudhanshu Agrawal (Business) (2570 Points)
Replied 28 May 2010

If we are talking about depreciation on computers and peripherals then we have to see it depending upon the peripheral nature and uses.

Moreover Income tax has no where mentioned that if assets amount is less than 5,000 then claim 100% depreciation in the same year.

PDA phones are considered in general machinery but if you want to give an explanation to AO then explanation can be as phone technology is also changing very fast thats the reason you have claimed depreciation @ 60%. But i dont think AO will agree with this view.