LIVE GST Certification Course by CA Arun Chhajer begins 21st April. Register Now!!

depreciation allowable ?

CA Mohit Agrawal (Chartered Accountant) (371 Points)

13 September 2010

Can we claim depreciation on plant & machinary even we have not used it duirng the year ,it has been used by the assessee in previous years and depreciation also has been claimed in those years.

If is cannot be claimed than why and is there any case law?

Reply
Follow
Share

13 Replies

CA Navin Jain (MANAGER (FINANCE & ACCOUNTS)) (11768 Points)
Replied 13 September 2010

i think depreciation shall be claimed

Kamal Jain (FCA) (200 Points)
Replied 13 September 2010

Depreciation is allowed from the date asset is put to use.

If the asset is ready to be used for the intended purpose, whether used or not anytime during the previous year, depreciation will be allowed.

Rahul Ramesh (CA Final, BCom, MBA) (1084 Points)
Replied 13 September 2010

depreciation is allowable

Member (Management) (325 Points)
Replied 13 September 2010

There are two situations possible here:

1. Part of the plant and machinery is not used. In this case, depreciation can be claimed as it forms part of a block of assets and this block is entitled to depreciation.

2. Whole of the plant and machinery is not used during the year. In this case, it can be tricky as obviously no business activity has been carried out during the year and hence the depreciation claim can be negatived as it was not " used " during the year. I doubt if "passive usage" concept can be applied in this case as there was no business activity at all.

Kamal Jain (FCA) (200 Points)
Replied 14 September 2010

Already discussed at length in this forum.Pls follow the link.

www.caclubindia.com/forum/depreciation-when-assets-103082.asp

Prachi Jindal (CA-Article-Final-Student) (129 Points)
Replied 14 September 2010

Originally posted by : mohit agrawal
	Can we claim depreciation on plant & machinary even we have not used it duirng the year ,it has been used by the assessee in previous years and depreciation also has been claimed in those years. If is cannot be claimed than why and is there any case law?

yes depreciation can be claimed..the rule is....once asset is aquired and ready to put to use the depreciation can be claimed in the previous year in which it is ready to put to use even if it is not used even a single day...in addtion to it if an assesee aquired a new asset and put to use in that same previous year he can claim additional depreciation of 20%...and once depreciation claimed on the asset it continues to be claimed in subsequent years as claiming depreciation not optional it is mandatory..!! only in two situations it can not be claimed..

1. WDV of block of asset is nil.. sec 50(1)

2. Block of asset does not exist. sec 50(2)

aney (Service) (25 Points)
Replied 15 September 2010

In the year of purchase, if the P & M is not used then depreciation cannot be claimed

whereas, in any subsequent year even if the asset is not used, depreciation can be claimed (provided depreciation is claimed in any of the previous years)

Sanjay Singh Rana (CA) (208 Points)
Replied 15 September 2010

Yes it can be claimed because for the purpose of this section the term ready to use and put to use have same meaning. for more clarity u can go through the section.

thanks

CA.G.Muguntha Narayanan (Internal Auditor at TVS Motors) (2195 Points)
Replied 15 September 2010

Dear Friends,

The concept of passive use or potential use shall be applied only in case of standyby assets (eg. Generators need not be used so long as power is there). In all other cases, depreciation cannot be claimed merely on the fact that the asset was ready for use. Pls refer CIT vs. YELLAMMA DASAPPA HOSPITAL (2007) 290 ITR353(MAD) CASE

If the machinery is not used, section 32 is not applicable. In view of the aforesaid decision, it is necessary that the depreciable assets should be actually put to use in the relevant financial year to ensure that the claim of depreciation is not denied.

Prachi Jindal (CA-Article-Final-Student) (129 Points)
Replied 15 September 2010

Originally posted by : aney
	In the year of purchase, if the P & M is not used then depreciation cannot be claimed whereas, in any subsequent year even if the asset is not used, depreciation can be claimed (provided depreciation is claimed in any of the previous years)

yes very much true...thtz y i hav use the term ready to put to use...in the act it means it is now in use even if it is actually not in use....!!

Sanjay Singh Rana (CA) (208 Points)
Replied 16 September 2010

Please refer to case CIT V Vidhyanchal (P) Ltd [2005](HC) where the asset is kept ready for use then it will be deemed to be in use. Thus asset is kept ready for use for more than 180days but actually used for less than 180 days then also the depreciation for the full year will be allowed.

dipak (accountant) (32 Points)
Replied 01 October 2010

please send free depriciation software for 2010-2011

thatking you

dipak51157 @ yahoo.com

Jinit Rathod (Article Assistant) (32 Points)
Replied 16 September 2011

In respect of the above subject, can we claim depreciation even when the asset is entire new block of asset and is not put to use in the current year. however the same is ready to be used?