ITC & Depreciation on Assets

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An advertising company is seeking clarification on claiming depreciation for a display hoarding constructed using GST-taxed raw materials and labour. They have already claimed Input Tax Credit (ITC) on these materials. The core question is whether they can claim year-on-year depreciation on this asset after having claimed ITC. The advice suggests that depreciation can be claimed on the asset's value, excluding the portion covered by ITC, provided it meets Income Tax Act provisions.

Jittu

Jittu (Querist)
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24 September 2023 As an advertising company, we have purchased raw materials on GST Tax Invoice and incurred labour charges for construction of a display hoarding which allows me generate monthly rental income from it. Now the confusion is that I have already claimed ITC on purchase of raw materials for the construction and developed this asset i.e. display hoarding, so can I claim year on year depreciation on this asset?

RAJA P M

RAJA P M (Expert)
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25 September 2023 Already You claim ITC, then the question can't arise.

RAJA P M

RAJA P M (Expert)
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25 September 2023 Yes, You Can claim depreciation as per applicable value

Jittu

Jittu (Querist)
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25 September 2023 Can you please explain in detail? In first answer, you said, that when ITC has already been claimed, then the question can't arise. What does that mean? What I could understand is if I have already claimed ITC, I cannot claim depreciation. Is my understanding correct?

But then in the second answer, you said that I can claim depreciation on applicable value?

Both these answers contradict each other. Can you please give better explanation for my understanding.

Thankyou in advance.

RAJA P M

RAJA P M (Expert)
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26 September 2023 RAJA P M • 25 September 2023 Yes, You Can claim depreciation as per applicable value. (Construction then it will account in asset. so only I replied in first answer...)

CA Shyam Agrawal

CA Shyam Agrawal (Expert)
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28 September 2023 DEPRECIATION CAN'T BE CLAIMED ON AMOUNT OF ITC AVAILED. ON REST OF AMOUNT DEPRECIATION CAN BE CLAIMED SUBJECT TO PROVISIONS OF INCOME TAX ACT.

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