In M/s ABC Pvt. Ltd. purchased a machinery on 01.01.2010 and the machinery is put to use on 01.04.2013 then is it mandatory to claim depreciation for the period from 01.01.2010-01.04.2013 under income tax act as well as companies act?
Akanksha Jain (Article) (690 Points)
14 March 2013In M/s ABC Pvt. Ltd. purchased a machinery on 01.01.2010 and the machinery is put to use on 01.04.2013 then is it mandatory to claim depreciation for the period from 01.01.2010-01.04.2013 under income tax act as well as companies act?
CS,CA F,Numrologi TusharSampat
(CS CA F Numerologist Astrologer Graphologist Face reader Vastu Expert)
(85930 Points)
Replied 14 March 2013
YES, in my view if it was ready to use on 1.1.2010 ( which is not clearified) then it is mandatory to claim depreciation irrespective of whether it was actualy used or not for the purpose of business.
wait for other members to answer.
Akanksha Jain
(Article)
(690 Points)
Replied 14 March 2013
Take another example..
Suppose the same asset is put to use on 01.01.2010 only.. so for F.Y. 2009-10 asset is used for less than 180 days..
Assessee will claim 50% depreciation.. as the asset is used for less than 180 days in the year of acquisition..
but suppose if asset is put to use after 01.04.2010 then in F.Y. 2009-10 it has not been used.. then will the assessee has to claim 100% deprecition?
CA Prashant Gupta
(DGM (F & A))
(14068 Points)
Replied 14 March 2013
| Originally posted by : TusharSampatM.Com CA,CS-FINAL | ||
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YES, in my view if it was ready to use on 1.1.2010 ( which is not clearified) then it is mandatory to claim depreciation irrespective of whether it was actualy used or not for the purpose of business. wait for other members to answer. |
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Don't agree with Mr. Tushar
in I.T. Act it is mentioned the word put to use NOT ready to use
sec 38 says asset on which depreciation is claimed must be use for business & profession
and in your case you didn't use the asset for business till 01.04.2013
so depreciation must not be claimed.
But once depreciation is started then every year it must be claimed
Aman
(Finance Professional)
(604 Points)
Replied 14 March 2013
as per the clarification of court in VISHWANATH BHASKAR SATHE vs CIT 10 ITC 386 (BOM)..the word "use" includes "ready for use"...hence in ur first query...the P & M was purchased on 1.1.2010 n it is ready for use..hence depreciation will be claimed starting from 1.1.2010...n 50% depreciation will be allowed in the year 2009-10...and also same in the second case it was available or ready for use from 1.1.2010....so same treatment will be there.....
Aman
(Finance Professional)
(604 Points)
Replied 14 March 2013
and ofcourse the asset must be used for Business n Profession to claim the depreciation.........
CA. Umang Sangal
(C.A )
(83 Points)
Replied 14 March 2013
Dear Akanksha
I am agree with Mr. Prashant Gupta. As per the provision of income tax, dep can be claimed, only when assets is put to use but in compaies act, as per AS-6, depreciation shall be charged, when assets is ready to use, therefore, in short, dep shall be charged from 1.1.10, as per companies act and as per income tax, shall be charged from 1.4.2013
Ganeshbabu K
(Audit and Tax Advisory)
(48559 Points)
Replied 14 March 2013
dEAR AKANKSHA
My opinion
companies act: companies act says about efluxion of time, so depreciation can be claimed as per companies books 1.1.2010,
But as far as incometax is concerned depreciation is allowed only when put to use for commercial production
if 1.1.2010 is asset put to use and because of lack of orders or another reason only you have not used then in that case u have to charge depreciation from 1.1.2010 only.
Date required as per incometax act is asset put to use for commercial activity and not the asset used first time for commercial production
CA Prashant Gupta
(DGM (F & A))
(14068 Points)
Replied 14 March 2013
| Originally posted by : Aman | ||
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as per the clarification of court in VISHWANATH BHASKAR SATHE vs CIT 10 ITC 386 (BOM)..the word "use" includes "ready for use"...hence in ur first query...the P & M was purchased on 1.1.2010 n it is ready for use..hence depreciation will be claimed starting from 1.1.2010...n 50% depreciation will be allowed in the year 2009-10...and also same in the second case it was available or ready for use from 1.1.2010....so same treatment will be there..... |
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Dear Aman
I read the case, that is not relevant for this case. in that case the point was whether one day was to be added for 180 days or not. Moreover I am giving the lines from the same case below:
11. The Supreme Court went, on to add :"
".....The word `used' has been read in some of the pool cases in a wide sense so as to include a passive as well as active user. It is not necessary, for the purposes of the present appeal, to, express any opinion on that point on which the High Courts have expressed different views. It is however, clear that in order to attract the operations of clauses (v), (vi) and (vii) the machinery and plant must be such as were used, in whatever sense that word is taken, at least for a part of the accounting year. If the machinery and plant have not at all been used at any time during the accounting year no allowance can be claimed under clause (vii) in respect of them and the second proviso also does not come into operation."
Akanksha Jain
(Article)
(690 Points)
Replied 14 March 2013
| Originally posted by : Aman | ||
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as per the clarification of court in VISHWANATH BHASKAR SATHE vs CIT 10 ITC 386 (BOM)..the word "use" includes "ready for use"...hence in ur first query...the P & M was purchased on 1.1.2010 n it is ready for use..hence depreciation will be claimed starting from 1.1.2010...n 50% depreciation will be allowed in the year 2009-10...and also same in the second case it was available or ready for use from 1.1.2010....so same treatment will be there..... |
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Thats a very old case...
Aman
(Finance Professional)
(604 Points)
Replied 14 March 2013
ACIT Vs Chennai Petroleum Corp Ltd....plz read this case..n u cant put me wrong now....
Aman
(Finance Professional)
(604 Points)
Replied 14 March 2013
Ms.Akansha n Mr. Prashant...plz read the above case..it is not so old..
Aman
(Finance Professional)
(604 Points)
Replied 14 March 2013
Decided by: ITAT, CHENNAI `A’ BENCH, CHENNAI (THIRD MEMBER), In The case of: ACIT v Chennai Petroleum Corpn. Ltd., Appeal No.: ITA Nos. 1967/Mds/2006 & 1643/Mds/2007August 26, 2009, Decided on:August 26, 2009
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