Depreciation as per Companies Act,1956

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CA Dron Bharadwaj (Querist)
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05 January 2010 As per NOTES to SCHEDULE XIV :
"Provided that where the aggregate actual cost of individual items of plant and machinery costing Rs. 5,000 less constitutes more than 10 per cent of the total actual cost of plant and machinery, rates of depreciation applicable to such items shall be the rates as specified in Item II of the schedule."

Example :
there is 1 heater and 1 machinery under head Plant & Machinery :
A-29000
B-15500

addition in A-4000

as it is less than 5000 and also less than 10% of 29000(10% of A),it
will be depreciated @ 100 % ?

OR

as it is less than 5000 and not less than 10% of 44500(29000+15500),it will be depreciated at normal rates ?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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07 January 2010 1) Total cost of machinery -- Rs. 44,500/-
2) 10 % thereof -- Rs. 4,450/-
3) Addition -- Rs. 4,000/-
4) Permitted limit -- Rs. 5,000/-
As amount in(3) is less than (2) and (4) addition can be depreciated @ 100 %.

CA Dron Bharadwaj

CA Dron Bharadwaj (Querist)
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07 January 2010 it means if the comapny has purchased 5 room heaters,
all the 5 room heaters can be depreciated at the rate of 100%.

in short :
each room heater will be regarded as individual plant & machinery so each heater is below 5000,hence depreciated at the rate of 100%.

CA Dron Bharadwaj

CA Dron Bharadwaj (Querist)
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04 February 2010 thanks

CA Dron Bharadwaj

CA Dron Bharadwaj (Querist)
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04 February 2010 thanks sir

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