Pgbp

An assessee, in addition to the claim of the normal depreciation, is entitled to a claim of depreciation u/s. 32(1)(iia) (‘additional depreciation’), on purchase of new plant and machinery and installation thereof, at the rate of 20% of the actual cost of such plant and machinery that is used by the assessee in his business of manufacture or production of articles or things. Following points should be considered: 

1. Any new machinery or plant (other than ship and aircraft) which has been acquired and installed by the above assessee after 31-03-2005.

2.  i) Additional deprecation is available on new imported plant and machinery.

    ii) It is also available on the new plant and machinery assembled by the assessee.

Besides the normal deprecation, additional depreciation shall be allowed @ 20% of the actual cost of the eligible assets in the previous year in which such assets is acquired and installed.

However, if such assets is acquired and put to use for less than 180 days in the previous year, then, the rate of depreciation shall be 50% of 20% i.e. 10%. (till AY 2015-16)

Additional deprecation is allowed only once and that too in the previous year in which the eligible asset is acquired and installed.

ii) Therefore, mere acquisition is not sufficient, the plant and machinery should be installed to be eligible for additional depreciation.

I agree with Ms. Shweta Bhatter 

 

We had assembled solar power plant and was commissioned on 31st march 2015. We have availed 10% additional depreciation as of 31st march 2015.Can the remaining 10% additional depreciation be availed as on 31st march 2016?

No. Option to avail additional depreciation can be claimed only once and that too in the year in which the asset is acquired and installed. So, you will not be entitled to claim the remaining 10 % additional depreciation next year.

w.e.f. A.Y 2016-17 If such P&M is put to use for less than 180 days in the year of its acquisition, then addn depn on such asset will be only 10%(as mentioned in the query)....Balance 50% of Addn Depn. WILL NOT LAPSE, but will then be available in the "immediately" succeeding previous year...{Also refer to Case law of Cosmo Films} I hope this clears your doubt....you can claim balance addn depn.

Following third proviso shall be inserted after the second proviso to clause (ii) of sub-section (1) of section 32 by the Finance Act, 2015, w.e.f. 1-4-2016 :

Provided also that where an asset referred to in clause (iia) or the first proviso to clause (iia), as the case may be, is acquired by the assessee during the previous year and is put to use for the purposes of business for a period of less than one hundred and eighty days in that previous year, and the deduction under this sub-section in respect of such asset is restricted to fifty per cent of the amount calculated at the percentage prescribed for an asset under clause (iia) for that previous year, then, the deduction for the balance fifty per cent of the amount calculated at the percentage prescribed for such asset under clause (iia) shall be allowed under this sub-section in the immediately succeeding previous year in respect of such asset:

 

Bare Act sec 32

You can avail balance 50% of the additional depreciation in next year. But additional depreciation is only available to manufacturing unit for plant and machinery installed in the factory.eg:you can avail that benefit for computer installed in factory but not in office