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Ver very urgent- additional depriciation

manik (ca in practice) (420 Points)

13 February 2013

we are manufacturing concern, during the year 2008-09 we have started setting up a new manufacturing plant and made purchases worth rs.1.5 cr and the purchases worth rs.1.00 cr in the year 2009-10 and the the plant was put to use in the year 2009-10. our query is i)whether we are eligible for additional depriciation u/s 32 on the whole amount of rs.2.50 cr in the A.Y. 2010-11 or on rs.1.00 Cr.

suggest any any relevant deicided case law or any board circular or clarification from the dept.

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4 Replies

CA Ashish Pathak (Employed at Cipla Ltd.) (2779 Points)
Replied 13 February 2013

As per the section 32(1)(iia), Additional depreciation @ 20% can be claimed if following conditions are fulfilled- (1) New machinery or plant (not second hand), (2) Acquired after 31.3.05, (3) assessed should be engaged in business of manufacture or production, (4) such plant Should not be installed in office premises/residence, (5) Additional dep Not applicable for office appliances or road transport vehicles. Apart from above prints, the section has not specified any restriction on amount for which this additional depreciation can be claimed. So the company can claim add dep. on entire amount of Rs.1.5crores.

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CA Ashish Pathak (Employed at Cipla Ltd.) (2779 Points)
Replied 13 February 2013

Also note that if these plants n machinery was used for less than 180days in the year of acquisition then additional dep can be claimed only @ 10% and not @ 20%. Hope all this should settle your query. Any further query is still welcome. Kind Regards.

Vineet Jaiswal (CA) (141 Points)
Replied 13 February 2013

Dear Ashish : I would like to raise one point that section 32 (1)(iia) contains the following phrase "has acquired and installed after the 31st day of March, 2005",

So both acquisition and installation should be necessary for claiming of additional depreciation?

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CA Ashish Pathak (Employed at Cipla Ltd.) (2779 Points)
Replied 13 February 2013

Yes Vineet, you are right. Thanks for pointing out my mistake. It should be both acquired and installed (i.e put to use) in order to be eligible to claim add. dep. Thanks a lot Vineet.