What will be the treatment for tax depreciation in case a machine is purchased in April-20 of INR 1,00,000 and scrapped in July-20 with INR 1,000? Whether tax depreciation is allowed on this asset? If yes, then how much? Plz reply.
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Quick Summary
This discussion explores the tax depreciation treatment for machinery purchased and subsequently scrapped within the same financial year. The consensus is that depreciation is permissible, even if the asset was used for less than 180 days. The calculation typically involves applying half the standard depreciation rate. Additional depreciation may also be applicable for manufacturing or production activities, provided the Written Down Value (WDV) and block of assets are maintained.
Depreciation will be allowed since machine is put to use for less than 180 days , 50% Dep. will allowed . Further you are engaged in manufacturing or production activity also eligible for Additional dep. with half rate. But make ensure that WDV as well as block of assets exist.
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