Depreciation

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Hi everyone,


A trust owns a building which has been rented. So, It has rental income. The building is not at all used for charitable or religious purposes. Can the trust claim depreciation. Is there any provisions in the Act for this.. Kindly reply..

Replies (3)

Dear Divya,

We have discuused this issue in the past as well, people have their different opinions on this, but I completely agree with the view which most of the authors have said -

1) If the Building was such that, anytime in the past ,is used for the purposes of trust - i:e on which Depreciation has been claimed even if it is for one year then "depreciation shall be claimed nomatter it is  used or not for the purposes of trust. reason is the explanation 5 to Sec 32, which makes it mandatory to claim depreciation..

2) If Building doesnot constitute as a part of Block of assets i:e on which Depreciation has not been claimed, then it cannot be said that such building has ever entered in the Block - Now Explanation 5 shall not work in this case, therefore Depreciation will not be allowed.

Thanks Amir.

Dear Divya,

Depreciation on Building has no relation with Whether building is using by trust for charitable or religious purpose or not.

Depriciation is 100% available on building.

Now, you have to understand that whether trust is charitable or religious or not.

--if trust is charitable or religious------provision of sec 11& 12 aplicable on trust.

--if trust is not charitable or religious ------- povision of Sec 11 & 12 not aplicable on trust.

 

 

May be that building is held for incidental purpose of trust.(i.e it constitute charitable purpose even if it is incidentally involves the carrying on of commercial activities.)

 

but, dep. on building is available to both the trust whether Sec 11 & 12 available or not.

correct me if i m wrong...........

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