Manish Kumar Agarwal, FCA

Depreciation – a non-cash expenditure allowed under Income Tax Act, 1961 following block concept. Under the block concept, all the assets falling within the same class and subject to same rate of depreciation are clubbed together and considered as single asset. Any alterations to the value of the block have to be strictly in accordance with the provisions of Chapter IV D of Income Tax Act, 1961.

As per section 32 of Income Tax Act, 1961, a assessee is entitled to claim depreciation on fixed assets only if the following conditions are satisfied:

1. Assessee must be owner of the asset – registered owner need not be necessary.

2. The asset must be used for the purposes of business or profession.

3. The asset must be used during the previous year.

The use of the asset during the previous year may be active use or passive [ie., kept ready for use]. I shall elaborate this topic at later part of this article

Now let  us go through some Judicial decisions in respect of deprecation.

  • In the recent case of  CIT v. Star Resorts (P) Ltd . (P&H) 335 ITR 587 it was held that Depreciation cannot be determined on the basis of estimate.
  •  Assessee obtained delivery of the new aircraft purchased by it in the later half of the relevant previous year and got the same insured, it was held that the aircraft was made ready to use in business , hence depreciation was allowable.(Asst year 1996-97) . Refer CIT v E.I.H. Ltd. 54 DTR 249
  • Kochi ITAT decided that when assessee, a charitable body, has already claimed deduction for acquisition of capital assets by application of money, a further claim of depreciation on same assets would amount to double benefits .
  • Depreciation under section 32 was allowable to the assessee company on the assets which were purchased in the name of the managing director of the assessee company and his wife but, used exclusively for the assessee’s business. (A. Y. 2004-05). Refer, CIT vs. Metalman Auto P. Ltd. 52 DTR 385.
  • It was held by Hon’ble Mumbai Tribunal that where cost of fixed assets was adopted by assessee on basis of registered valuer’s report and there was no evidence of transaction a collusive one, or to reduce tax liability and there being no clause for payment of goodwill, the assessee was entitled to depreciation on actual cost shown in the books of accounts. (A. Y. 2000-01). Refer, Dy. CIT vs. Lafarge India Ltd. 9 ITR 118 (Mum.)(Trib.).
  • Hirer of an asset under hire purchase agreement is entitled to depreciation in view of the CBDT Circular No. 9 dt 23-3-1943 (C & P Vol. 10. P. 537 -538 4th Edition). (A. Y. 1995-96). Refer, IT vs. Kaveri Engineering Industries 53 DTR 102 (Mad.)(High Court).
  • In the case of Chowgule & Company v ACIT, it was held that mere accounting entries do not give right to assessee to claim depreciation on goodwill.
  • An assessee should not be deprived of benefit of depreciation u/s 32 for not running its factory due to adverse law and order situation. Refer, CIT v Norplex Oak India 10 163.
  • After the amandment of sec 32, depreciation is to be allowed on tangible & intangible assets irrespective of fact that there is no erosion in value of these assets. Refer Eypore Sugar Company Limited v ACIT 9 122.
  • Assessee is entitled to claim depreciation on plant and machinery even if it is used during the year for trial production. Refer, CIT vs. Mentha & Allied Products 47 DTR 284 (All).  Again , Depreciation is allowable even where trial–run production takes place. Refer, Finolex Cables Ltd 29 SOT 595
  • If the assessee have merely financed the vehicles and borrowers are registered owners of such vehicles it would be a loan transaction and in such case the assessee will not be entitled to depreciation on such vehicles, on the other hand, if the vehicles are purchased by the assessee and retained their ownership with registration in their name and the vehicles were either given on lease or given under hire purchase agreement giving an option to the hirer to purchase if after the payment of lease rentals or hire charges during the agreed period, then the assessee will be entitled to depreciation, matter remanded for consideration. Refer , CIT vs. Manappuram Central Finance & Leasing Ltd. (2010) 46 DTR 323 (Ker.).
  • Actual user of the machinery was not required with respect of discarded machinery and condition for eligibility for depreciation that the machinery being used for the purpose of the business would mean that the discarded machinery was used for the purpose of the business in the earlier years for which depreciation has been allowed. Refer, CIT vs. Yamaha Motor India Pvt. Ltd (2010) 328 ITR 297 (Delhi).
  • In the case of CIT v Paliwal Glass Works 326 ITR 407 it was decided that Subsidy received from State government for specific purpose of purchase of generator set. Subsidy to be deducted in computing actual cost
  • In case of expenditure on leased premises in order to make it fit for assessee’s business, if any extra facility was created by way of brick works and connected expenditure, the same would be a capital expenditure eligible for depreciation under explanation 1 to s. 32(1) and if not, the expenditure would be revenue in nature covered by s. 30(a)(ii).  Refer,  EDS Electronic Data Systems (India) (P) Ltd. (2009) 23 DTR 10 (Del)(Trib).
  • Scrap value of the assets which have been written off during the year is to be reduced from the WDV of the block of assets for the purpose of allowing depreciation and not of the individual assets. Refer, Xerox India Ltd. (2010) 127 TTJ 84 (Del).
  • Defective machineries found during trial run – Whether depreciation is allowable on machineries which were brought for business purpose and found to be defective after the trial installation. Held, Yes. The defective machineries cannot be said that they were not for business purposes. Hence, the claim is allowable. Sri Chamundeshwari Sugar Ltd. 223 CTR 423.
  •  In the case of G R Shipping 309 ITR 125 it was decided that The assessee, engaged in shipping business, owned a barge which was included in the block of assets. The barge met with an accident and sank on 6.3.2000 (AY 2000-01). As efforts to retrieve the barge were uneconomical, the barge was sold on as-is-where-is in May 2001 (AY 2002-03). As the barge was non-operational and not used for business at all in AY 2001-02, the AO denied depreciation. On appeal by the assessee, the Tribunal took the view that after the insertion of the concept of “block of assets” by the T.L. (A) Act, 1988 w.e.f. 1.4.1988 individual assets had lost their identity and only the “block of assets” had to be considered. It was held that the test of “user” had to be applied upon the block of assets as a whole and not on individual assets. On appeal by the Revenue, the High Court dismissed the appeal holding that the issue was squarely covered in favour of the assessee by its earlier judgments in Whittle Anderson 79 ITR 613 and G. N. Agrawal 217 ITR 250.
  • As per s. 32(1) the asset is to be owned and “used” for the purpose of business or profession, the expression “used for the purpose of business” when applied to block asset would mean use of block asset and not any specific items in the said block as individual assets have lost their identity after becoming inseparable part of the block asset. Refer, Bharat Aluminium.
  • The Supreme Court held that in case of manufacturer of tea, by virtue of rule 8D, only 40% of the income is taxed and consequently in deciding liability only proportionate depreciation is required to be taken in to account as that is the depreciation actually allowed. Refer, Doom Dooma India Ltd. 310 ITR 392 (SC).
  • Assessee having sold the machinery and then acquired the same on lease and lease rental was also paid, it could not be said that transaction was sham or a device, and therefore depreciation was allowable. Refer, Punjab State Electricity Board. 30 DTR 153.
  • The expenses incurred by Assessee towards training fees of its personnel before setting up of plant were to be capitalized as part of plant and machinery and depreciation was to be allowed in respect of the same. Refer, Gujarat Guardian Ltd.
  • In case of block of assets, in order to allow assessee’s claim under section 32(1), use of individual asset for purpose of its business can be examined only in first year when asset is purchased and subsequent years use of block of assets is to be examined. Existence of an individual asset in block of assets itself amounts to use for purpose of business and therefore, depreciation is allowable on it, even though saidasset is not actually used in course of business during relevant assessment year. Refer,  Swati Synthetics Ltd. vs. ITO  38 SOT 208 (Mum.).
  •  Assessee company having not acquired any special rights of business or commercial nature in the course of amalgamation of three group companies with it, the goodwill appearing in its books of account as a balancing figure for the assets acquired and the price paid is goodwill simpliciter and therefore, it is not eligible for depreciation. Refer, Borker Packaging (P) Ltd. vs. ACIT  40 DTR 29 (Panaji) (Trib.).
  • Finance company cannot claim depreciation as they are not the owner. Refer, CIT v Manappuram General Finance & Leasing Ltd. 5 74 Ker.
  • Assessee is not entitled to depreciation on a plant which is not operation since its capitilsation. Refer, Sponge Oron India Ltd V DCIT 5, 58 Hyd ITAT. However, in the case of CIT v Premier Industries Limited 323 ITR 672 MP. It was held that even idle machine is entitled for depreciation.
  • Assessee would be entitled to depreciation and investment allowance on increased cost of Plant & Machinery resulting from increase in liability to repay forign currency loand taken for purchase of such plant & Machinery. Refer, Century Enka Limited V ACIT 188 Taxmann 382 Cal. Again in the case of DDIT V Staubil A.G. India 49 Mum -ITAI -2010 it was held that Depreciation on assets acquired out of foreign currenncy loans: Depreciation on account of enhanced cost due to fluctuation in forighn rate is an allowable claim.
  • Original cost of Machine include AMC cost for 10 Years – Allow to be capitilsed. Refer, CIT V D.D. Industries Limited 323 ITR 596.
  • Assessee not claiming depreciation – change of law w.e.f 1.4-2002 – deduction in respect of depreciation will be granted automatically Dr. Mrs. Sudha S. Trivedi Vs ITO 318 ITR 356.

Unabsorbed Depreciation:

  • The High Court of Himachal Pradesh in the case of CIT v Kriti Resorts Pvt Ltd decided that Unabsorbed depreciation for and up to AY 1996–1997 could be carried forward and set-off against income chargeable under any head of income in any subsequent year
  •  Assessee being entitled to deduction under section 10B upto A.Y. 2005-06, provisions of section 10B (6) are not applicable in the relevant A.Y. ie 2004-05 and therefore unabsorbed depreciation brought forward from assessment years prior to A.Y. 2000-01 can be set off against business income or against any other head of income including income from other sources.(Asst year 2004-05). Refer, Dy CIT v Akay Falvours & Aromatics (P) Ltd 55 DTR 1.
  • Unabsorbed depreciation of earlier year in which no deduction was claimed u/s 10B is available for set off against other taxable income of subsequent A/Y. Refer, Patspin India Limited v DCIT 9 140.
  • In case of Acquisation of Fixed Assets, Actual cost of same to be considered for purpose of section 32 should be actual cost paid by Assessee. Refer, DCIT v Lafarge India Limited 9 40
  • Assessee company was entitled depreciation in respect of gas sweetening plant which was kept ready for use but could not be actually used due to lack of availability of raw material during relevant assessment years. Refer, ACIT v Chennai Petroleum Corporation (2010) 125 ITD 396 (Chennai).
  • Once it is found that assets are used for business, it is not necessary that all the items falling within the block of assets have to be simultaneously used for being entitled to depreciation. Refer, CIT v. Sonal Gum Industries (2010) 42 DTR (Guj) 159.
  • Unabsorbed depreciation relating to assessment year 1997-98 to 1999-2000, cannot be set off in 2003-04 and 2004-05 against income from other sources. Refer, Dy. CIT vs. Times Guaranty Ltd  4 ITR 210 (Mum.) (Trib.) (SB).
  • Unabsorbed depreciation could be set off against income from house property till the provision was amended w.e.f. 1st April, 2002. Refer, CIT vs. SPIC Ltd 37 DTR 177.
  • The unabsorbed depreciation brought forward as on April 1, 1997 could be set off against the taxable business profit or income under any other head for the Asst. Year 1997-98 and even subsequent years. Short term capital gains for the Asst. Year 1999-2000 can be set off against unabsorbed depreciation brought forward as on April 1, 1997. CIT vs. Rpil Signalling Systems Ltd (2010) 328 ITR 283 (Mad.).
  • Unabsorbed depreciation of amalgamated company cannot be deducted while taking written down value of asset taken over of amalgamated company. Refer, CIT v Silical Metallurgic LTd 324 ITR 29.

Additional Depreciation :

  • The ITAT Ahemdabad decided that Whether when Directors’ report admits that there is no change in installed capacity of company, a contrary CA report cannot contradict same to claim additional depreciation. Hence, Assessee’s appeal dismissed
  • In the case of Anurena Tristar v ITO 330 ITR 168 it was decided that No addl depreciation in case machine was not new.
  • Production of ready mixed concrete amounts to manufacture or production of goods and the assessee is entitled to claim additional depreciation under section 32 (1)(iia) on RMC machinery. Refer, YFC Projects (P) Ltd. vs. Dy. CIT (2010) 46 DTR 496 (Delhi)(Trib.).
  • Windmills installed for electricity generation which did not increase plant capacity and which was not the  core business, additional depreciation is allowable. Refer, CIT vs. Texmo Precision Castings (2010) Taxation 468 (Mad.).
  • Additional depreciation disallowed for failure to file audit report in Form 3AA  along with original return – Revised return filed within time – Technical ground – Disallowance  not proper. Refer, CIT Vs Sharda Motor Industrial Limited 319 ITR 109.

Classification of Assets.

  • Assessee engaged in printing business, used certain hardware for execution of printing process, said hardware could not be categorized as ‘computer’ and would not be eligible for higher depreciation. It is only where machine is being used essentially and predominantly for computing capability and where it is not being harnessed for other specialized industrial uses, be it mechanical, electric or electronic (or a composite thereof) activity that it could be called as a computer.(A.Y. 2005-06). Refer, S. T. Reddiar & Sons vs. Dy. CIT 129 ITD 475 / 135 TTJ 480 / 49 DTR 326 (Cochin)(Trib.).
  • Approach road constructed by the assessee inside its factory premises should be treated as part of building as such, depreciation has to be allowed on the same. Refer, CIT vs. Sunshine Glass Indus P. Ltd. 49 DTR 31 (Raj.)(High Court).
  • In view of the amendment of Appendix I w.e.f. Asst. Year 2003-04 allowing depreciation @ 60 percent on software, depreciation is allowable on expenditure for development of website @ 60 percent. (A.Y. 2003-04 & 05). Refer, Dy. CIT vs. C. M. Y. K. Printech Ltd. 53 DTR 59 (Delhi)(Trib.).
  • Generator is to be depreciate @ 15% not 20%. Refer, CIT v P Glass Works 333 ITR 355.
  • Depreciation is allowable on specified intangible assets like, license or any other business or commercial rights of similar nature and not on Goodwil. Refer, Osram India (P) Ltd. vs. Dy. CIT 51 DTR 297 (Delhi)(Trib).
  • Purchase of hospital as going concern along with goodwill – Assesse entitled for depreciation. Refer B Raveendran Pillai v CIT 332 ITR 549.
  • Hardware like danippon screen, electronic plate processor  & K rite 510 involved in execution of prionting Processing by assessee does not qualify to be categorized as computers and thus not eligible for a highrer rate of depreciation. Refer, S T Reddia & Sons v DCIT 9 133.
  • Goodwill is entitled for depreciation . Refer CIT v Hindustan Coco Cola Beverages (P) Limited 331 ITR 192.
  • Where assessee company received brand name under a scheme of arrangement under section 391 to 394 of Companies Act 1956, assessee was eligible for deppreciation in respect of brand name under section 32(1)(ii) of the Income Tax Act. Refer, KEC International Ltd. vs. Addl. CIT (2010) 41 SOT 43 (Mum.).
  • Depreciation is admissible on foreign cars used at foreign sites for assessee’s business. Refer, CIT v Punjab Chemi.Plants Ltd (2010) 43 DTR (P&H) 322.
  • Designs and interior decoration work carried out in its office by the assessee carrying on the business of interior designing for the purpose of demonstrating its work to the prospective clients and exhibition purpose cannot partake the character of “furniture and fittings” but is “Plant” and is entitled to depreciation applicable to plant. Refer, Asst CIT v Eskay Agencies (2010) 42 DTR (Chennai) (Trib) 366.
  • Routers & Switches are to be included in Block of Computer entitled to depreciation @ 60% Refer, DCIT v Datacraft India Limited 6 85 Mum ITAT / 40 SOT 295.
  • Though JCB has been categorized as an excavator and its main function is removing soil or earth, yet at the same time, JCB’s another function is to carry or transport removed soil and dump it at another site to discharge function like transshipment and loading into another vehicle and therefore, for the purpose of depreciation, JCB can be treated as a motor lorry and it would be eligible for higher depreciation at 40 percent. Refer, Gaylord Constructions (2008) 175 Taxman 99 (Magz) (Cochin).
  • Goodwill is not an intangible asset within the meaning of s. 32(1)(11) hence acquisition cost of goodwill is not entitled to depreciation. Refer, R.G. Keswani 116 ITD 133.
  • License granted by State Government for collection of toll on a road which constructed and maintained by the assessee on build, operate and transfer basis  in terms of agreement with the State Government for a fixed period of 16 years and 9 months is an intangible asset eligible for depreciation as prescribed u/s.  2(1)(ii). Refer, Asoka Info (P) Ltd. 129 TTJ 77 (Pune) (Trib). However, in the case of Tamil Nadu Road Development Company Ltd. 24 DTR 618 it was held that Road is not plant but after asst year 1988-89 is included in the category of building for depreciation as such.
  • Commercial rights of exploration of mineral oils acquired by assessee by entering in to production sharing agreement with the Russian Government fall under the expression ‘any other business or commercial rights of similar nature’ same being akin to “licence” as stipulated in s. 32(I)(ii) and therefore .they are in the nature of intangible assets eligible for depreciation. Refer,  ONGC Videsh Ltd. 33 DTR 22 (Del)(Trib).
  • Non compete right acquired by the assessee company is eligible for Depreciation under cl (ii) of s. 32(1) as intangible asset being of the same nature as business/commercial right of a patent etc mentioned in that clause .Refer, Medicorp Technologies India Ltd. 21 DTR 69.
  • Assets purchased and leased back to same person. Assessee entitled to depreciation. Refer,  ICICI Limited 307 ITR 262 (AT)(Mum).
  • Lease of machinery before end of accounting year, Lessee installing machinery after end of accounting year is not relevant. The assessee is entitled to depreciation. Refer, Kotak Mahindra Finance Ltd. 317 ITR 236.
  • Where the assessee is engaged in the business of leasing out motor trucks and lorries, is entitled to claim depreciation at the rate of 40 per cent on such leased out vehicles. Refer, Agarwal Finance Co. (P) Ltd. 28 DTR 102 (Cal).
  • Membership card of stock exchange would be entitled to claim depreciation on the WDV of the membership right of the stock exchange. Refer, Kotak Securities Ltd 24 DTR 214.
  • Higher rate of depreciation is also admissible when motor lorry is used by assessee in his own business of transportation of goods on hire. Refer, S.C. Thakur & Bros. 180 Taxman 348.
  • Depreciation is allowable on spares which are not actually used but are kept ready for use. The expression ‘used for the purpose of business’ includes ‘ready for use’. The spares which are specific to a particular machine may become useless once the machine is discarded even if not actually used but kept ready for use. Refer, Insilco 20 DTR 65.
  • Workers quarters having been leased out as a part of the plant and income derived as assessed as business income, the assessee was entitled to depreciation @ 40 percent u/s. 32(1)(iv) in respect of workers quarters. Refer, Rieta Biscuit Co. (P) Ltd. 31 DTR 89. Similar decision was given in the case of CIT vs. Bajaj Auto Ltd 322 ITR 29 where it was held that Canteen for workers inside factory premises, constitutes factory building. Entitled to higher rate of depreciation.
  • In order to apply expln. 3 to s. 43(I), AO has to determine the actual cost of the assets to the assessee which can only mean arm’s length value or real value or worth of assets transferred .Burden is on AO to establish that actual cost is not proper. Refer, Chitra Publicity Company (P) Ltd. 127 TTJ 1(Ahd)(TM).
  • Goodwill is a bundle of rights which include, inter alia, patents trade marks, licences franchises, etc and they assume importance in commercial world as they represent a particular benefit or advantages or reputation built by a person / company / business house over a period of time and customers associate themselves with such assets hence depreciation would be allowable on same. Refer, Kotak Forex Brokerage Ltd. 33 SOT 237.
  • Depreciation cannot be allowed on Membership card on Stock Exchange. Refer, Madhur Shares & Stock (P) Limited v ACIT 2010 5 118 AHD –ITAT.
  • It is impossible to preseume that expression ‘Licence” provided in section 32(1)ii) is an endless expression and even a tenancy right can be brought under it. Refer, ACIT v malayala Manorama Co Limited 5 79 Cochin.
  • Finding that flat fitted with amenties & ready for use and also used for office use, entitled for depreciation. Refer, CIT V Panacea Biotech Limited 324 ITR 311.

Concept of Block of Assets :

As per the provisions of section 43(6) of the Income Tax Act, the WDV of block of assets as at start of the year has to be adjusted as follows so as to arrive at closing WDV:

–  It has to be increased by actual cost [as per section 43(1)] of any asset falling within in the block acquired during the previous year.

– Thereafter, It shall be reduced by ‘moneys payable’ in respect of asset sold/discarded/demolished or destroyed during the previous year.

It has been held in Ashok Betelnut Case [ mad. ] that moneys payable represents gross sale consideration where as the contrary has been held in the case of Essar Shipping Limited case.

No deletion is permitted from the value of the block except when the asset is sold, discarded, demolished or destroyed. e.g., in case of theft of an asset, no deletion is permitted from the block of asset since the asset is neither sold nor demolished nor destroyed nor discarded.

–  Further, scrap value, if any of any asset has to be reduced.

The question of deduction of scrap value from the block arises only when the asset is not sold.

Now lets analyse a interesting concept arising in relation to claiming of depreciation. In earlier part of this article, I have laid down the essential for claiming depreciation. One of the requirements was that asset must be used during the previous year. For the purposes of Income Tax Act, a previous year is a distinct unit. In case an asset is discarded by the business but not sold, section 43(6) permits the scrap value of the asset to be reduced from the block in the previous year in which such asset is discarded. The assessee is entitled to claim depreciation on the residual value of such discarded asset [ie., Opening WDV of such asset less scrap value] even though such discarded asset is not used for the purposes of business or profession in such year and subsequent years.

In case of CIT v. Yamaha Motor India Private Limited (2009) 226 CTR (Del) 304, the assessee claimed depreciation on discarded assets which were written off during the previous year. The AO disallowed the claim on the ground that the assets were not used for the purposes of business during the previous year. It was held that that the term ‘used’ appearing in section 32(1) comprise of both active use and passive use. Further, the expression ‘used for the purposes of business’ used in section 32(1) has to be read harmoniously with the term “discarded” meaning thereby that the assessee is entitled to claim depreciation as far as discarded asset is concerned if the asset has been used for the purposes of business in earlier years. Adopting a realistic approach and harmonious construction, the expression ‘used for the purposes of business’ appearing in section 32 when used in respect of discarded asset would mean that the use in the business need not necessarily be in the relevant previous year but in earlier previous years. Any other interpretation would lead to an incongruous situation because on the one hand the depreciation is allowed on discarded asset after allowing inter alia adjustment for scrap value, yet, on the other hand use would be required of the discarded machinery which use is not possible.

To conclude, the decision of the delhi high court is logical considering the existing provisions of the Act as regards allowability of depreciation on discarded asset. Either the Act must permit the residual value of the discarded asset to be written off completely in the year in which the asset is discarded or the interpretation adopted in the aforesaid judgement has to be accepted

Depreciation on leasing? An ageing puzzle

Under the Income Tax law, two most important conditions for tax depreciation claim pertain to ownership and usage of the asset. As is the case on any other contentious matter, history is replete with judicial pronouncements by courts on this subject. Though the condition on usage is more or less a settled issue,ownership condition still continues to keep the judiciary engaged particularly as new models of businesses are evolving. Entitlement of depreciation in a lease transaction has witnessed the maximum debate in recent times. The moot question being who shall be eligible to claim depreciation in a lease transaction — whether the lessor (person who hires or leases the asset for a consideration) or the lessee (who hires for business use).Before we dwell on leasing transactions, I must add that the issue on hire purchase is a law which has been settled way back in 1943. An administrative circular clarifies that where the terms of agreement provide that the asset shall eventually become the property of the hirer or confer on the hirer an option to buy the asset,the transaction shall be regarded as one of hire-purchase and he would be entitled to depreciation. The administrative guideline was predominantly dealing with a situation of a movable asset, though, without any specific reference. On the other hand, a land mark Supreme Court judgement in 1999 in the case of Mysore Minerals clarified that the condition of ownership must be assigned a wider meaning — any one in possession of property in his own title exercising such dominion over the property as would enable others being excluded and having right would be the owner. The fact that a formal deed was not executed and registered under the law would not be of relevance. In one stroke, the apex court diluted the definition of ownership and took a liberal view.

Of course, the law was subsequently amended to provide that insofar as the condition for legal ownership of an immovable property is concerned. In common parlance, a lease is understood as hiring of an asset for a periodic payment; parties involved in the transaction are classified as lessor and lessee whilst the periodic payment to be made by lessee is termed as lease rental. From an accounting standpoint, simplistically, lease can be classified in three forms– finance lease, operating lease and hire purchase. A lease is classified as a finance lease if it is for the entire economic life of the asset and under the lease arrangement all risks and rewards incidental to the ownership of the asset is transferred to the lessee.

The International Accounting Standards Committee defines finance lease as an arrangement where all the risks and rewards incident to ownership of an asset are with the lessee. Any lease other than a finance lease is operating lease. On the other hand, if under the lease agreement, the lessee/hirer has an option to acquire the asset at the end of the identified lease period, such arrangement shall classify as hire purchase.

Interestingly, the last part of definition is in conformity with the 1943 Board guideline, thereby suggesting the wisdom of the Indian administration.Admittedly, the line of distinction between a finance lease and a hire purchase is blurred and leaves a lot to interpretation. Interestingly, the interpretation of various forms of lease has been ratified and applied by different courts from time to time; the determination of whether a lease is a finance lease or operating lease or is in the nature of a hire purchase arrangement depends on the facts and substance of the transaction rather than the form of such arrangement. Indian Accounting Standard 19 on ‘Leases’ provide that in case of an operating lease, the lessor shall be eligible to claim depreciation in respect of leased asset; whereas in an finance lease the lessee becomes the economic owner of the asset and, therefore, should be entitled to claim depreciation on the leased asset.Under the Income tax Act, 1961, a tax payer is eligible to claim depreciation on an asset provided the asset is owned by such person and is being used for the purpose of his business. There is plethora of precedents where the claim of depreciation has been denied by tax authorities in case either or both of these tests are not met.The twin tests of ‘ownership’ and ‘use’ for claiming depreciation become even more critical in lease transactions, wherein the owner of the assets foregoes the possession and use of the asset; whilst the assets is used by lessee for his business.

The principles governing eligibility of lessor to claim tax depreciation under the lease arrangement is enunciated by administrative guidance issued by the CBDT in circulars 9/1943 and 2/2001. These circulars do not distinguish between the two kinds of lease arrangements and provides that in a lease, other than a hire purchase, the lessor is eligible to claim depreciation, provided the tests of ‘ownership’ and ‘use of the asset’ are satisfied. The circulars indirectly shows the thumbs down to accounting treatment of lease by providing that classification of asset in accordance with Accounting Standard 19 will not have implications on the allowance of depreciation to the lessor under the income tax laws. After the issuance of administrative guidance on depreciation in leasing transcations, there is no ambiguity insofar as depreciation in an operating lease situation is concerned. On the contrary, in case of finance lease there has been prolonged controversy over the determination of ownership of the leased asset and therefore the eligibility of lessor to claim depreciation on the asset leased under a finance lease arrangement. The principles for claiming tax depreciation provided unique planning opportunity to taxpayers and throw the issue open for varying interpretation.Increasingly, finance companies began funding purchase of asset under a finance lease arrangement. This mechanism enabled the financing companies to reduce their taxable income base by claiming depreciation as deduction against the income.

In other instances, the owner of the assets resorted to sale-and-lease back mechanism with the objective of realising value from tax depreciation on the asset by enabling the buyer (or lessor) claim depreciation on inflated cost of asset. However, in most such instances, the courts have held the transaction was a colourable device to evade taxes and disallowed the deprecation claim. Though the eligibility of a lessor to claim depreciation in finance lease has been a matter of debate courts have become increasingly alert on misuse of tax depreciation shield under the garb of finance lease. In a recent landmark decision of Marico Industries, a Mumbai Tribunal held that in a finance lease it is the lessee who becomes the owner of the assets for all economic purposes and therefore the depreciation on the leased asset shall be available to the lessee and not the lessor.

The Tribunal applied the principles enunciated by the Apex court in Asea Brown Boveri’s case ( though not on a tax related matter ) wherein the court held that a finance lease is essentially a financing arrangement whereby the lessee assumed the ownership of the asset in as much as it is the borrower who chooses the property to be purchased, takes delivery, enjoys the use of occupation of the property, bears the wear and tear and takes the risk of loss or damage. The decision of the Tribunal could well prove to be a turning point insofar as the claim of depreciation in a finance lease in concerned. Though the decision of Tribunal is not the last word on the question of law; nevertheless the ruling could take away the heat from long drawn debate over availability of depreciation in a finance lease Whilst the finality on the issue would need more time, tax payers and tax advisers would anxiously await the Supreme Court’s decision, which is soon expected to hear a sizeable bundle of appeals arising out of inconsistent High Court decisions. I would hope that the court would lay down principles, taking into consideration the inconsistency in the past decisions and align the decision (to some extent) with definitions under the Indian and International accounting standards. Of course, the facts of each individual case would be the deciding factor in each judgment.

Sec 43A of the IT Act Vs. AS 11

Suppose a machine was imported for one lakh US dollars when the exchange rate was Rs 45 per dollar. Both in the accounting records as well as in the tax records, the transaction would have been recorded debiting the asset concerned with Rs 45 lakh. But should the asset be financed by supplier’s credit or a specific borrowing for the purpose, the two records would now start pursuing divergent courses with any increase in the actual repayment due to devaluation of the rupee meanwhile vis-À-vis the dollar, swelling the actual cost of the fixed asset in the tax records even while leaving the accounting records undisturbed as it was On the contrary, any appreciation in the rupee vis-À-visthe dollar would have the opposite effect in the tax records while leaving the accounting records undisturbed once again. These then in brief are the respective mandates of Section 43A of the Income-tax Act, 1961 and Accounting Standard 11 (AS 11). AS 11 does not tinker with non-monetary items which fixed assets are. Instead, any notional increase or decrease in the rupee liability on the balance sheet date on the touchstone of the exchange rate prevailing on that date is required to be recognised with a corresponding debit or credit to the profit and loss account.Sagacious shift

Prior to the amendment made by the Finance Act, 2002 to Section 43A, a chronic tinkering was contemplated — any increase or decrease in rupee liability in respect of fixed assets acquired on deferred payment terms or with borrowed funds on account of fluctuation in the exchange rate between the currency in which the payment is required to be made vis-À-vis the rupee, was required to be added or, as the case may be, subtracted from the actual cost of the fixed asset each time there was a change in the exchange rate, thus giving rise to the nightmarish possibility of repeated tinkering with the asset account given the day-to-day fluctuations witnessed in the currency market, especially if the currency in which the payment is required to be made happens to be a floating currency. Mercifully, the amendment made a sagacious shift in favour of recognising the increase or decrease in such liability only at the time of actual payment, thus dispensing with the need to chronically tinker with the asset account for every notional increase or decrease in the rupee liability. To be sure, the objectives of a fiscal law and accounting standards cannot always be the same. AS 11 is right on notional increase or decrease in rupee liability being recognised at the balance-sheet date given the fact that otherwise the balance sheet would be guilty of under- or over-valuation of a liability. It is also right in not tinkering with the cost of the fixed asset given the fact that no increase or decrease in the fair value of the asset accrues merely on the strength of the gyrations in the currency market.

Cost of asset

One can understand a fiscal law providing for a heightened tax incentive such as depreciation on fixed asset and pro tanto there would be a divergence between the written-down value (WDV) of an asset in the tax records vis-À-vis its accounting records. While this may be unavoidable, the gulf between the two sets of records can be bridged by agreeing not to disagree at least on the issue of the cost of the asset. The I-T Act should allow any increase in the rupee payment on account of acquisition of a fixed asset as expenditure in one shot instead of condescending to amortise the same by way of depreciation. And when there is a reduction in rupee payments, the same should be treated as income straightaway. AS 11 is not payment fixated like Section 43A. Instead, it mandates revaluation of all monetary items on the balance sheet date. In other words, it has a balance sheet fixation which of course is understandable. One area where the two can converge is the cost of the asset — the I-T Act should emulate AS 11 in not tinkering with it in view of the fact that gyrations in the currency market by themselves do not add to, or detract from, the value of the asset.



Depreciation can be used as an effective tool for tax planning. According to section 32 (1), depreciation can be claimed in respect of building, machinery, plant or furniture and w.e.f. assessment year 1999-2000 depreciation on intangible assets such as know-how, patent rights, copyrights, trade marks, licenses, franchises, or any other business or commercial rights acquired on or after 1.4.98 can also be claimed, which are owned by the assessee and used for the purposes of business or profession.

It may be noted that for the purpose of depreciation “Building” includes roads, bridges, culverts ,wells and tubewells. Likewise, plant and machinery includes Typewriters, Photocopiers, Telex & Fax Machines, Computers, Tools and Books (used by the professionals). Depreciation is allowed at prescribed percentage, which varies between 5% to 100% for various blocks of assets on the written down value. However, as per second proviso to section 32(1),depreciation shall be restricted to 50% of the prescribed percentage in respect of such asset which is acquired by the assessee during the previous year and put to use for the purpose of business or profession for a period of less than 180 days in that previous year. Another important point is that the first proviso to section 32(1) , which provided for full deduction of the actual cost of any machinery or plant costing upto Rs.5,000,has been omitted by the Finance Act , 1995 with effect from Assessment Year 1996 -97. However depreciation on professional books has been allowed at the rate of 100% with effect from Assessment Year 1996-97.


Wind mills and other special devices including electric generators and pumps running on wind energy, bio-gas plant, bio-gas engines, agricultural and municipal waste conversion devices producing energy and electrically operated vehicles including battery powered or fuel-cell powered vehicles, solar power generating systems etc., are some of the items included in machinery and plant which are eligible for 100% depreciation. An existing industry having considerable taxable profits may plan diversification in the industries and can claim 100% depreciation in respect of the new plant and machinery. In the recent past many companies have successfully done such tax planning, which is absolutely within the legal frame work and in accordance with the Govt. policy to promote investments in certain sectors.


In the case of – CIT v. Mahendra Mills and ors. [2000] 243 ITR 56 (SC). Supreme court has held that the provision for claim of depreciation is for the benefit of the assessee. If he does not wish to avail of that benefit for some reason, the benefit cannot be forced upon him. It is for the assessee to see if the claim of depreciation is to his advantage. Income under the head ‘ Profits and gains of business or profession’ is chargeable to income-tax under section 28 and income under section 29 is to be computed in accordance with the provisions contained in sections 30 to 43A. The argument that since section 32 provides for depreciation it has to be allowed in computing the income of the assessee cannot in all circumstances be accepted in view of the bar contained in section 34. If section 34 is not satisfied and the particulars are not furnished by the assessee his claim for depreciation under section 32 cannot be allowed. Section 29 is thus to be read with reference to other provisions of Act. It is not in itself a complete code.

If the revised return is a valid return and the assessee has withdrawn the claim of depreciation it cannot be granted relying on the original return when the assessment is based on the revised return. Allowance of depreciation is calculated on the written down value of the assets, which written down value would be the actual cost of acquisition less the aggregate of all deductions “actually allowed” to the assessee for the past years. “Actually allowed” does not mean “notionally allowed”. If the assessee has not claimed deduction of depreciation in any past year it cannot be said that it was notionally allowed to him. A thing is “allowed” when it is claimed. A subtle distinction is there when we examine the language used in section 16 and sections 34 and 37 of the Act. It is rightly said a privilege cannot be a disadvantage and an option cannot become an obligation. The Assessing Officer cannot grant depreciation allowance when the same is not claimed by the assessee.


Non-claiming of depreciation may at times be more beneficial rather than claiming it. Accordingly one may plan not to claim depreciation in a particular year and to claim the same in a subsequent year, in which depreciation can be claimed at a higher written down value due to non-claiming of depreciation in the earlier year. In this process the benefit of depreciation is not lost but it is deferred only.

In the following situations it is advisable not to claim the depreciation-

i) In case where certain deductions and allowances like brought forward investment allowance may lapse for insufficiency of profits, in a particular year, if the depreciation is claimed.

ii) In case of non-corporate assessees expecting higher profit in the subsequent year or years, if their present income is falling in lower tax bracket, as claim of depreciation in the subsequent years will help them reducing the taxable profits and thereby saving tax, which would have been payable at a higher rate considering the slab rates.

Non-claiming of depreciation may be used for avoiding the provisions of section 50. It may be noted that profit on sale of depreciable asset is treated as Short Term Capital Gain under section 50. Therefore, if any person desires to hold an asset for the purpose of re-sale at a future date, particularly in cases where such asset is retained for such period which may entitle him to claim it as a long term asset, then it is advisable not to claim depreciation on the same. In such a process, the profit on sale of the asset will be beyond the mischief of sec. 50 and shall be treated as Long Term Capital Gain (LTCG). As a result such assessee will be entitled to the benefit of cost inflation index as well as the concessional rate of tax on LTCG.

Further w.e.f. assessment year 1997-98 depreciation can be carried forward for 8 assessment years only, as such it has become more important to claim it only in the year in which taxable profit arises.


One of the stipulation for claiming depreciation under section 32(1) is that the assessee had used the asset for the purpose of business or profession. When an asset will be considered to have been used, has been a matter of controversy. Some important Judicial views are as under :-

Punjab National Bank Ltd. v. CIT 141 ITR 886 (Del.)– That depreciation had to be allowed in full on the lifts and the air-conditioning plant since they were being used by the assessee for the purpose of its business, the fact that they might also be utilised by the tenant of one of the floors or customers or visitors did not make any difference. Plant or machinery could be said to be used by somebody else if such other person has control over the same. It is the control which determines who is using it. “User” means not only getting benefit, but also controlling, running, stopping, repairing, replacing, etc.

Whittle Anderson Ltd. v. CIT 79 ITR 613 (Bom.)- The word “used” should be understood in a wide sense so as to embrace passive as well as active user ; when machinery is kept ready for use at any moment in a particular factory under an express agreement from which taxable profits are earned, the machinery can be said to be “used” for the purposes of the business which earned the profits although it was not actually worked. Western India Vegetable Products Ltd. v. CIT 26 ITR 151 (Bom.)- When a business is established and is ready to commence then it can be said of that business that it is set up; but before it is ready to commence business it is not set up. There may however be an interval between the setting up of the business and the commencement of the business and all expenses incurred during that interval would be permissible deductions.

CWT v. Ramaraju Surgical Cotton Mills Ltd. 63 ITR 478 (SC)- A unit cannot be said to have been set up unless it is ready to discharge the function for which it is being set up. It is only when the unit has been put into such a shape that it can start functioning as a business or a manufacturing organisation that it can be said that the unit has been set up.

CIT v. Industrial Solvents and Chemicals (P) Ltd. 119 ITR 608 (Bom.)– Even if the finished product obtained by the assessee could be termed as sub-standard, it cannot be contended that because the end product then obtained was not of proper standard, the business of the assessee cannot be said to have been set up though the plant was being worked.

Grasim Industries Ltd. v. CIT 32 TTJ 329 (Bom-Trib.)- A company need not have actually commenced production to claim depreciation. It was enough if it was merely ready to produce. The bench ruled that the plant was “ready for” business in fiscal 1992-93, and hence eligible for claiming depreciation.


It is more or less an age old tradition to treat only small repairs to an asset as revenue expenditure. However, there are occasions when heavy repairs are undertaken and/or one whole item of Plant & Machinery may require replacement. The taxing authority tends to immediately jump to the conclusion that the same is on capital account. The assessee also succumbs to the assertion of the authorities under ignorance of law. The result, no appeal thereby inviting heavy taxation.

Some situations when repairs/replacement may be treated as Revenue expenditure and Capital expenditure  are given below – 1. A factory has got 2 or 3 electric motors. If one of them is worn out and replaced by a new motor of similar capacity involving a heavy cost, in such case, the expenses would be treated as revenue expenditure. The entirety of Plant & Machinery in a factory is to be treated as one unit capable of carrying on the business. If any one part of that unit, say an electric motor in this instance, is replaced by another motor of similar capacity, it is a repair to the whole gamut of Plant & Machinery and therefore allowable as revenue expenditure.

2.If the same factory is reconstructed by replacing the old Plant & Machinery by new ones of bigger capacity then it will be a clear case of reconstruction and the cost of new Plant & Machinery will be treated as capital expenditure.

3.If a wall is constructed as covered by the obligation of a tenant as per conditions of a leasehold property, such cost incurred for reconstruction of the wall will be treated as revenue expenditure. It is a case similar to the replacement of a few units of worn out railway track by a company out of its entire long track, which was held as revenue expenditure by the courts.

4.Cost of replacement of petrol engine of a bus by a diesel engine to continue to run it will also be treated as revenue expenditure.

 5.A fleet owner purchases a second hand car with a view to use its parts to repair his own other cars. It is a simple case of revenue expenditure as the car was purchased for using its parts to repair the other cars and not to run it as a car.

 6.A company undertook extensive repairs to its own building by repairing/replacing some columns and beams and plastering with cement with the process of guniting which involves heavy expenses. As in such case no structural alteration was made to the building and the assessee carried out only those repairs which were absolutely necessary to preserve and maintain the building, the expenditure was not capital expenditure. The magnitude of the repair was in consonance with the magnitude of the wear and tear the building had suffered.

7.A Company doing business in automobile parts takes lease of an old building, the owner of which is incapable of repairing/reconstructing the same. The lessee company wants to reconstruct the building at its own cost to run its business.  In such a case, it may be stated that expenditure was incurred to relieve the assessee from a series of future revenue outgoings and therefore the expenditure would be on revenue account and therefore allowable as such.

8.Expenses incurred on arrear repairs to restore the property to usable state are treated as revenue expenditure.

9.In case heavy expenses are incurred for extensive repairs to a lease property without bringing into existence a new asset, the cost incurred had to be allowed as general revenue expenditure, even if not as current repairs.

10.In case of a cinema hall premises taken on monthly rent with no long term lease if expenses are incurred to remove defects in cinema building pursuant to direction of an order of the District Magistrate in order to get a renewal of the cinema hall license, the entirety of such expenses partakes the nature of repairs under a statutory direction. The same are therefore allowable as general revenue expenditure.

11.Magnitude of an expenditure on repairs is immaterial consideration in deciding whether it is on a revenue account or capital account. It is the nature of alteration, renovation, repairs etc. which is relevant.

12.Due to fire in factory and office premises, as also residential quarters of the Managing Director, if expenses are incurred for repairs and reconstruction, such expenditure incurred for putting the original building in proper working shape does not bring into existence a new building. As such the same is considered as revenue expenditure

13.An assessee manufacturing cars contributed an amount necessary to improve nearby approach roads belonging to the Government. The money spent was not to bring about any asset or advantage of enduring benefit to the assessee, but to run the business effectively and conveniently and hence, in such case the amount is deductible as revenue expenditure, though it was spent voluntarily by the assessee in view of business interest.

14.If expenses are incurred by a cotton mill towards remodelling of furniture in its own retail depots, such expenditure is deductible on revenue account.

15.If an assessee has taken three buildings on a short term lease and effected improvement to those by construction of partition walls, wall panelling, show windows etc. the expenses so incurred will be treated on revenue account in view of the facts that the assessee was not the owner of the premises and there was no longer term lease in favour of the assessee.


 1.If the repair is not resulting into a new asset or any additional asset, it will be revenue expenses otherwise it will be capital expenditure.

2.If the expenses are incurred on ground of commercial expediency, the same may be considered as revenue expenditure.

3.If any expenses are essentially incurred for reconstruction or modification as per direction of any statutory authority, it may be treated as revenue expenditure.

4.In determining the nature of expenditure, the nature of assessee’s business and overall circumstances have to be considered. No uniform test can be applied to all situations.

The above list of items are not complete, but it is not possible to  cover as the list is very vast. In case of any clarification or feedback please contact me at [email protected]

(Republished With Amendments)

More Under Income Tax


  1. Kavya says:

    There is a one HUF who want to transfer it’s business to partnership firm so it has to transfer it’s all asset to new partnership firm than how it can claim depreciation for the half year because it’s value of asset will be nil??

  2. Vaidehi says:

    Hello. Due to software mistake depreciation schedule got deleted from the return of income but was taken as deduction in the return. However CPC disallowed depreciation in 143(1). Can they do so? Is there any case law supporting the deduction of depreciation. Please help in this matter.

  3. sri says:

    Hi Sir,
    There is a sale of asset in the Month of June’2018,while claiming depreciation on such asset ,wheather full year depreciation need to be claimed or To the extenet of usage ?

  4. D.k.Vattish says:

    net profit from business is rs.50000/-and other sources rs.200000/-and the dep. is of rs 165000/-what is the status of depreciation ,is it adjusted against the other sources or not , today cpc added the dep in income and created the tax on it .pls advice me

  5. megha says:

    i have query we purchased an asset in 2013-14 and received a discount but due to error we did not credit the discount received and claimed depreciation on full amount but in 2014-15 we want to rectify our mistake. So how this will be given effect in our books. Please give me suggestion.
    Thanking You,

  6. Shweta says:

    sir, i have one query related to depreciation charged under income tax act. one car which is used for business purpose is sold during the year and another car is purchased which is used less than 180 days and sale consideration received for old car is less than WDV of old car . what is the tax treatment of car and depreciation.

  7. dipesh trading co. says:

    kindly send me instruction by Ministry of Commerce,ministry of finance ,planning commission and tresury your early reply should highly appriciated

  8. Girish Mangidcar says:

    Hello Sir,

    I have query with related to the Reclassification asset from one class to another during FY 13-14( ex from furniture to Plant and machinery ) i want to know is there any effect on Depreciation u/s 32of income tax act because of Asset Reclassification.

    Thanking You

    Girish M.

  9. Taufeeq says:

    sir would u explain whether buildings of educational institutions comes with in ambit of factory building or not …… & plzz also provide case law reference for supporting your answer…

  10. Mujahed says:

    Dear Sir,
    please clarify the following. we are manufacturing comapny under EOU. untill 2008 business is running & Depreciation also claimed up to above period and almost business closed physically. in 2009 no business did and also EOU licence period completed. the above situation can we claim depreciation for the year 2009..? kindly advice. thanks


  11. Vijay Lakhara says:

    Sir, Thank you very much for your best articles. We have set up the solar system on the terrace of the bussiness premises and is owned by company. is depreciation claimable @ 80%. and is there any necessity to show whether this system started before 30.09.2012 in order to claim full depreciation if yes what is the proof required to convince the income tax deprt.

    Thanking you,

    Vijay Lakhara

  12. Nem Singh says:

    Dear Brother,

    Your work is most valuable to the readers and professionals in the fields. God grace you for helping to update the issue. Next in every issues are differents as the business become globaly and scope of the assets, tangible as well as not-tangible. First we the facts and then law the other things relied ther after.

    Againg thanks for your valuable knowledge. God grace you!

  13. Rajkumar Jain says:

    Dear Sir,
    if an assets given on lease and income of lease of assets considered in the Income from other sources . later on assets were  sold  there is loss on the sale ( i.e short term loss on sale of depreciable assets) my query is 
    1) how it will reflect in ITR 4,?
    pl respond 

  14. pratik says:

    if we sell a car as on 17th march of 175000 and opening wdv is 178000 than depreciation is allowable for full year? and if there is a capital gain than how its treatment and if loss than how its treat?

  15. if asset is not running says:

    i have one vehicle its not use for incoming rupees since last 3 year  so, i am not pay tax  so i need some suggation 

  16. Priya says:

    Dear Sir,

    According to us, budget 2012 states as under:

    E. Service Tax Rules, 1994:

    1. A common simplified registration format for Central Excise and Service Tax is being placed for public comments, together with further liberalization in registration requirements, particularly centralized registrations. The proposed changes are attached as Annexure C. 12

    2. Likewise a new simplified one page common return with Central Excise: to be called Excise & Service Tax Return (EST for short) is being introduced. The format of the return is given as Annexure D. It is also being proposed that the cycles for the payment service tax and filing of return should coincide. To this end the tax payment requirement is proposed to be revised as follows:

    A. Assessees who paid tax of Rs 25 lakh or more in previous year and new assessees other than individuals and firms: Monthly

    B. Others: Quarterly

    3. This will improve cash flow for small businesses registered as companies or other corporate bodies while making large non-corporates pay tax on monthly business .

    According to above provision, all kinds of assessee (including body corporate) who paid tax less than Rs. 25 lakh are required to pay tax and file return quarterly in the FY 2012-13 where as your current article states to the contrary. Kindly check and revert at the earliest.

    With Regards,

  17. Danumjaya says:

    sir, the vehicles purchased in the name of parent company and the same vehicles used by the subsidiary company from the date of purchase and the entire vehicles purchased through hirepurhcase scheme, requesting you that who will claim the depreciation whether parent co or else subsidiary com if so kindly provide the with case laws and supreme courts judgemnts / notifications etc.,

  18. Ashit says:

    Can you tell me that the Repairs made in foreign country for specific parts of imported cars, imported before 10-15 years——whether all expenses are treated as Revenue expenditure ? pls. give supporting case laws in favour or the aforesaid.

  19. DIPESH says:





  20. Tax Law Books says:

    Very nice article posted from your side and thanks for sharing with us.
    We are leading information provider in the areas of tax, accounting, business law and human resources.

  21. shivayogi says:


    you file a revise return online by furnishing all the details, i.e., the block in which comes under all the assets. then they will give the reply for them.

    thanking you


    jcn shivayogi

  22. S.PRAKASH says:

    the depreciation has been explained very clready in the article thanks for writing this article.Now a days we are receiving the intimation U/S 143(1)(a) from CPC and they are disallowing the Depreciation ,as the same has not been furnished in the Schedule to the ITR,even though the same has been claimed to arrive the net taxable income.Is the CPC correct?Can they disallow the Depreciation just because the same is not furnished in the Schedule to the ITR?Kindly clarify.
    thanking you,

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September 2021