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Depreciation Issue...!!!

Sunali (Learner) (1317 Points)

20 January 2009

As per the Proviso to Section 32(1)...

50% of the depreciation is allowed, if the asset is put to use for less than 180 days in the previous year..

but if an asset is purchased in Jan 2007 but put to use on Dec 2008, the restriction of 50% of depreciation will not apply i.e. for A.Y. 2009-10 (F.Y. 2008-09) depreciation on the respective asset will be charged at 100% and no depreciation will be charged for the A.Y. 2008-09 (F.Y. 2007-08) as the asset is put to use in the next year.

However, if the asset is put to use in April, 2009, will the respective asset be eligible for depreciation in A.Y. 2009-10 (F.Y. 2008-09), considering the put to use principle...!!!!!

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11 Replies

Vijay gandhi (consultant) (567 Points)
Replied 21 January 2009

since the asset is put to use in April, 2009, therefore, be eligible for depreciation in A.Y. 2010-11(F.Y.2009-10)..... at 100% rate

not in A.Y. 2009-10 (F.Y. 2008-09),

Chandrashekhar Azad (Chartered Accountant) (45 Points)
Replied 21 January 2009

Yes, Depreciation is eligible in AY. 2019-11 at 100% rate.

Sunali (Learner) (1317 Points)
Replied 21 January 2009

Thanks Vijay...but can U give any reference for the same pls..

Sunali (Learner) (1317 Points)
Replied 21 January 2009

Originally posted by :Chandrashekhar Azad
"	Yes, Depreciation is eligible in AY. 2019-11 at 100% rate.	"

thats fine sir, but will the asset be eligible for depreciation in A.Y. 2009-10 (F.Y. 2008-09)..

Pavan Jain S (Chartered Accountant) (1575 Points)
Replied 21 January 2009

No. Since the asset has not been put to use, no depreciation can be claimed for AY 2009-10.

However, if the value of the asset depreciates by effluxion of time, you can claim depreciation for AY 2009-10

Chandrashekhar Azad (Chartered Accountant) (45 Points)
Replied 22 January 2009

I think this will make it clear, the 50% chargebility is applicable only in the previous year in which the asset is purchsed if the asset is put to use for less than 180 days. But from the next year the chargebility of deprecation will be 100% whether it is put to use or not. Because in the defination of deprecation it is clearly mentioned that the deprecation will chargeable by eflux of time also, in that case the asset is not put to use then also it is liable for deprecation.

Sunali (Learner) (1317 Points)
Replied 28 January 2009

thanks sir..

Abhinav Agarwal (M.Com C.A SAP Consultant) (814 Points)
Replied 28 January 2009

HI..

I am surprised as to how this small concept became such a big one that everybudy got confused. I Hope to clarify this issue.

See, as far as chargeability of depreciation is concerned, there is no term called date of Acquisition. You need to consider only date of PUT TO USE. from there on you need to calculate the number of days the asset is used during the year.

However, Sec 42(1) deals with Actual cost. This section need to be considered while taking COA . If a asset is put to use much after date of Acquisition, the cost will be reduced by the amount of Dep for that period as if the asset is being used since inception.

Hope this clarifies your doubt.

Regards,

CA Narayan Rao (Asst. Accounts Officer) (60 Points)
Replied 06 February 2009

Hello,

I want to Know whether UPS Systems can be treated as part of computer system eligible for depreciation under IT Act. Please provide me case Laws which are relevant to this issue