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depreciation

Sanjita (Associate) (24 Points)

23 May 2009

Can different rates for depreciation be applied for Old assets and additions in the same block in the same year?

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3 Replies

PiyushAgrawal (Chartered acooutant in practice) (575 Points)
Replied 23 May 2009

No the rate od dep for the particular blocks is fixed. we cann't change rate of dep.

if u find any problem than you should refer sec 32 of income tax axt 1961.

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Sandeep Keswani (Tax Consultant) (1064 Points)
Replied 23 May 2009

Hi Sanjita..........Income Tax Act does not recognise individual assets. It only recognises BLOCK OF ASSETS. Thus what really exists in the books is the BLOCK OF ASSETS and not individual assets. As such, the rates of Depreciation prescribed in the Act relate to a particular Block and not to a particular asset. Hence it is NOT possible to charge depreciation on assets under the same Block at different rates. Age of assets is not a criteria.

CA-ASPIRANT (CA-STUDENT ) (650 Points)
Replied 23 May 2009

Above answers are correct but in some cases we may apply for new rate of deprecation.

As per my knowledge deprecaition rate can be changed in some circumstances, if we apply for the same to the authority.

Source: GOOGLE

Special tax depreciation rates

2.15 Taxpayers can apply for special depreciation rates that are higher (or lower) than those prescribed by Inland Revenue if they consider the prescribed general depreciation rate is substantially different from the rate that should apply. This may arise, for example, if a depreciable asset is being used in a way that is different than that considered by Inland Revenue when determining a general economic depreciation rate for the asset. A special rate may also be applicable if the economic life of a depreciable asset is dependant on certain factors, such as the length of a taxpayer’s income-earning process or business (and cannot be salvaged at the end of it). However, the onus is on the taxpayer to prove that a special depreciation rate is warranted by, for example, providing evidence that an asset will cease to be useful to them or any other taxpayer after a certain date. The taxpayer is also required to provide the appropriate data to be considered by Inland Revenue.

2.16 When considering a special depreciation rate application, Inland Revenue must have regard to the legislative formula for calculating economic depreciation rates, as well as the depreciation rate adopted by a taxpayer for financial reporting purposes.

2.17 Taxpayers can apply for a provisional depreciation rate for an asset if no applicable prescribed rate currently exists. This may arise in the case of newly invented assets.

2.18 Special and provisional depreciation rate applications are considered by Inland Revenue Adjudication and Rulings.