Depreciation as per IT Act as well as Co's Act.

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CA Namrata Shetty (Querist)

18 January 2011 A tubewell has been constructed at a factory. A pump set has been installed to pull water from the tube well. The tubewell facilitates supply of water to the factory for production purposes with the help of pipes. These pipes also facilitate supply of water to gardens situated within the factory and also to other places like washrooms, basins, etc. I wanted to know the treatment of the Tubewell, Pump set & the Pipes for depreciation purpose. Under which head will the same be classified and what will be their respective rates of depreciation under companies act as well as Income Tax Act? Please reply at the earliest.

CMA. Dinesh S Adhikari, ACMA

CMA. Dinesh S Adhikari, ACMA (Expert)

18 January 2011 There are only three heads defined under income tax act, which any asset will be fall: (a) Land & Building
(b) Furniture
(c) Plant & Machinery(P&M).
This tubewell with it's all pipes & pump set would be fall under P&M and this will be eligible for depreciation@15% because there is no specific rates provided for pump-set under income tax depreciation list and it has been described that where not specific rates provides then we have to take 15% dep. rate.

Please also check depreciation list for yours satisfaction.

Regards!!!
Dinesh S. Adhikari

CA Namrata Shetty

CA Namrata Shetty (Querist)

18 January 2011 But as per It Act, "Buildings" include roads, bridges, culverts, wells and tube wells.then how it will be considered as P&M?

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