Depreciation u/s 32 of i.t. act

 

One of my client being an Individual is engaged in Manufacturing Activities since last 8 years.
 
In his Books there is a Block of Asset being  Building Premises on which he charging Depreciation every year as per I.T. Act.Till 31.03.2011 the Book value was Rs.43222/- During F.Y.2011-12 the said Building is sold for Rs.6,50,000/- in April,2011 by way of Registered Sale Deed. Now He purchased a new Guest House  for Business Purposes on 28/03/2011 for amount Rs.22,00,000/-
 
Now query is whether we can add the said Guest House in the Block of Building Premises during the financial  year 2011-12 & charge depreciation on the balance amount @ half rate of depreciation as per I.T. Act or not. 
Replies (1)

I think in this case, the Guest house building can't be added to the block of first building, because the rate of depreciation as per the Income Tax Act is different for both types of building.

In case of Guest house building, the rate is 5% and in other case it is 10%.

So, in the first case the block of building will become Nil and STCG will be calculated for that asset.

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