Depreciation on the assets not used during the year

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Retthinakumar (Querist)

26 July 2012 Dear Friends,

I have a doubt on claiming depreciation on the assets of a factory which was shut down due to some judicial actions.

Though there is a provision in sec.32 of IT act to claim depreciation on assets which is "ready to use", I have doubt on the point that the factory was not run through out the year. So please any one help me on this point.

Nachiket Vasantgadkar

Nachiket Vasantgadkar (Expert)

26 July 2012 Depreciation is combined effect of wear and tear, age or obsolescence. The depreciation rates provided u/s 32 of Income Tax Act are for IT purpose only. Companies Act provide depreciation rates for accounting purpose and company can use accelerated rates also.
But depreciation has to be provided eventhough asset is not used.

Amol S Joglekar

Amol S Joglekar (Expert)

26 July 2012 Rather than 'ready to use', income tax is concerned about 'put to use' In your case it seems the factory was running in earlier years and now this year it stopped functioning due to legal hassals. The choice would be yours to claim depreciation or not. On the other hand if factory has not started functioning at all from day one, 'put to use conditioon is not satisfied and hence depreciation can not be claimed

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