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Can we claim Depreciation @ 100%

Rakesh sharma (chartered accountants) (43 Points)

07 August 2008

Dear all, I have again a very interesting query.

This is a case of a Private Limited Company.

There was a super structure built in a rented premises which was vacated after 3 years (say in the month of August 2007). In earlier years, depreciation @ 10% was claimed as per Income Tax.

The opening WDV is say 30 Lacs. In the books of account of the company, the asset has been written off by claimimg depreciation @ 100% and charged to the profit & loss account, which is as per the policy of the company.

Now can we claim 100% depreciation in Income-tax or it is a short term capital loss after providing depreciation @ 10% for 6 Months.

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3 Replies

CA Gaurav Gupta (Practice) (307 Points)
Replied 07 August 2008

Originally posted by :Rakesh sharma
"	Dear all, I have again a very interesting query. This is a case of a Private Limited Company. There was a super structure built in a rented premises which was vacated after 3 years (say in the month of August 2007). In earlier years, depreciation @ 10% was claimed as per Income Tax. The opening WDV is say 30 Lacs. In the books of account of the company, the asset has been written off by claimimg depreciation @ 100% and charged to the profit & loss account, which is as per the policy of the company. Now can we claim 100% depreciation in Income-tax or it is a short term capital loss after providing depreciation @ 10% for 6 Months.	"

rakesh there will STCL assuming That there is no other asset in the same Block. In Income tax there is no concept of 6 months dep

CA Naveen Kumar Agrawal (Chartered Accountant / MBA) (944 Points)
Replied 08 August 2008

Gaurav is right. if company has no other asset in the block then opening wdv of Rs. 30 lac(as mentioned) will be reduced by the amount reced (if any) on disposal of the asset. if balance is positve it will be STCL. if negative it will be credited to p&l a/c upto the total amount of Depreciation already written off on such asset into P&L a/c in earlier years and any excess over it will be STCG. also there is no concept of allowing proportionate depreciation on asset used for a part of a year.