Query on additional depreciation?

Dear Amit, \

u r bang on.......

Additional depreciation will be allowed even part of the block has been tranferred & consequently WDV falls below the cost of eligible asset or WDV becomes Nil/-ve

                                                              Amounts                              No. of Mach.

Opening WDV                                    100                                         2

Addition                                                500                                         3

-Sold                                                     700                                          4

Balance                                                -100                                         1

Here i have example presented (assumed). In this case block is still there i.e. 1 machine but Sale Value is more that Opening WDV and Addition.

If this is the csae then Short Term Capital Gain will come and Depreciation will be NIl.

I think Amir is correct, as section 32(1)(iia) clearly says 20% of actual cost.

But in practical questions in the book of Dr. Girish Ahuja & in CA. Vinod Gupta notes, they have restricted the amount of additional depreciation to the extent of W.D.V of the block, when it is +ve otherwise zero.

In book of Dr. V.K. Singhania, they have allowed additional depreciation when the W.D.V of block is even zero.

Can you explain me where i m wrong ?

Why Exception one to the rule will not be applicable in u'r case.

To refer Exception one , read para 109.7-2a. V.K. Singhania Professional Edition

Well, I use Kitret software. I put the dummy data for computation of depriciation in it. Computation that it showed is as below: (Rs. in lacs)

WDV opening    15

Additions             15

sale                       35

WDV closing        -5

STCG                    5

Additional depriciation 3 lacs

Aamir is correct..... Even if WDV is negative than also addn depr would be allowable.

Ameet I referred VK professional... This condition is part of allowability of normal depriciation allowance and not additional depriciation both of which are dealt with by different sub sections hence the condition mentioned in respect of allowability of normal dep cannot restrict additional dep...

Hi Friends

Nice informative discussion going on...

But, both STCG and Additional depreciation arise no...?

Ya GK bhai both will arise..... because addn dep is allowed on actual cost of plant and machinary added during the year....

Hi Ameet,

Additional depreciaion is dealt with Sec 32(1)(iia), which says 20% of cost, while normal depreciation is dealt in Section 32(1)(i) which says % of W.D.V & hence, exception to rule is not applicable!

If u are referring D. V.K. Singhania Professional edition, u can see para 109.8-1 & problem109.8-P1.