Depreciation

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Chinmay Desai (Querist)
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07 December 2009 Say a proprietary concern ABC is owned by Mr.X for 3 months & Mr.Y for 9 months due to inheritance.As there are two owners two separate returns would be filed.Then how to compute depreciation for each owner.There is provision in IT to apportion it in the ration of 3:9.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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07 December 2009 Claim of proportionate depreciation,in certain situations, is covered in the fifth proviso to section 32 of the Income tax Act,1961.But the situation referred is not covered in the said proviso. Therefore,my understanding is,Mr.X can claim full year depreciation at half the rate since asset is used for less than 182 Days. Similarly Mr.Y also can claim full year depreciation at full rate on the WDV ,arrived at by the above method, since he used the asset for nine months.

CA SURENDRA KUMAR RAKHECHA

CA SURENDRA KUMAR RAKHECHA (Expert)
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07 December 2009 Apportionment in case of succession is applicable i.e. total depreciation available to an assessee shall be apportioned in the ratio of 3:9

See proviso to Section 32(ii)which runs as under : -

Provided that the aggregate deduction, in respect of depreciation...........in the case of succession referred to in.....section 170.......shall not exceed in any previous year the deduction calculated at the prescribed rates as if the succession .....had not taken place.., and such deduction shall be apportioned between the predecessor and the successor, .....in the ratio of number of days for which the assets were used by them.

You may refer Taxmann's Income-Tax Act (As amended by Finance Act No.2),2009 page No. 1.168.

CA Surendra Rakhecha
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Chinmay Desai

Chinmay Desai (Querist)
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08 December 2009 I think Mr.Surendra is right in saying that total depre cant exceed the deduction computed as if there were no succession.But I am not sure this provision is applicable to individual assessees as they have mentioned only company assessees.

CA. Rishabh Mittal

CA. Rishabh Mittal (Expert)
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08 December 2009 It applies to Individual also.

Chinmay Desai

Chinmay Desai (Querist)
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08 December 2009 Yes,I found the said provision in Taxmann's Income-Tax Act (As amended by Finance Act No.2),2009 page No. 1.168.
As per section 170 it will apply to individuals also.
Thanks all of u for the discussion.

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