Depreciation on building

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

19 August 2015 Husband and wife had purchased office on the ground floor of commercial complex in 2010 in ratio of 3:1.

Both are running their profession from same office. Depreciation on building is not charged till 2015. Can they now start claiming depreciation on building from 2015 onwards?

How to compute building cost out of total office purchase price?

Amol S Joglekar

Amol S Joglekar (Expert)
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19 August 2015 01. They can very well charge depreciation from 2015.
02. It will be in the ratio of their ownership i.e. 3:1
03. Please note that for the purposes of Income tax, in the case of depreciable asset, the depreciation shall be deemed to have been charged even though not actually charged. Please take a note of it and charge the depreciation accordingly.

Querist : Anonymous

Querist : Anonymous (Querist)

19 August 2015 Thanks Mr. Joglekar,

I have some connecting questions.

i) As depreciation was not claimed in the last 5 years, so it is actually excess taxes paid?

2) If office is sold today what will be cost taken for computation of captial gain? Original purchase cost or cost after deemed depreciation even though it was never claimed?

3) Office premises is construction on land. As depreciation is not allowed on land, how to bifurcate the same from purchase price?

Thanks in advance

Amol S Joglekar

Amol S Joglekar (Expert)
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19 August 2015 01. Yes, since depreciation is not claimed.

02. WDV as arrived at after deducting the unclaimed depreciation shall be deemed to be the value for computation of capital gain. Please note, since it is depreciable asset, the capital gain is always Short Term Capital Gain.

03. Take the help of a Govt Approved Valuer to bifurcate the value between LAND and Building.

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