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Terminal depreciation

Tax queries 14605 views 5 replies

 

Does Terminal Depreciation exist even when a single asset is discarded from the block, or is it applicable only in the case where whole block is deleted ?

Replies (5)

Terminal depreciation exists only when depreciation is claimed on SLM basis. Therefore if asset is brought in BOA then no question of terminal depreciation.

thanks

kaushal

https://taxbykk.blogspot.com/

When asset on which depreciation is allowed u/s 32(1)(i) is sold discarded or demolished in a previous year, and if the insurance, salvage, compensation or sale value, as the case may be, receivable in respect of such asset falls short of the written down value, such difference would be allowed as deduction [Terminal Depreciation] u/s. 32(1)(iii). The condition for allowing such deduction is that such deficiency is actually written off in the books of account

In case of power undertakings :-

As per rule 5(1A):- depreciation can be claimed accordind to SLM in case of tangible assetsat a %specified in Appendix IA to the income tax rules on the actual cost of INDIVIDUAL ASSETS.

since only power undertakings can use terminal depreciation and as per rule 5(1A) individual assets are considered not BOA.....so dont get confused in case of terminal depreciation  do not consider BOA at all.

elaborate whole procedure of ternmninal dep. with the help of example ??

 

What if we write off.why cbdt give deduction when we write off deficiency in books of accounts


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