Income Tax : Depreciation is statutory deduction that allows businesses to set off cost of their tangible & intangible assets over their useful...
CA, CS, CMA : Learn the correct way to calculate and apportion depreciation using the Written Down Value method for accurate scrap value over an...
Income Tax : Explore allowable tax deductions for AY 2025-26, covering salaries, house property, business, and personal expenses. Maximize your...
Income Tax : Rates of depreciation applicable for income tax purposes from assessment year 2003-04 to 2025-26. This guide includes rates for ta...
Income Tax : Learn how to optimize corporate tax planning through depreciation. Explore key provisions, asset considerations, and methods for m...
Company Law : Key Features of Fixed Asset Management Tool with Depreciation Calculator for Companies ♦ Line wise SLM and WDV Depreciation as p...
Income Tax : Addressing the concerns raised by Agriculture Produce Market Committees (APMCs), it has been decided not to levy the 2% TDS on cas...
Income Tax : The proviso to section 32 provides that the aggregate deduction, in respect of depreciation of buildings, machinery, plant or furn...
Income Tax : ITAT Rajkot remanded the matter as lower authority has not exercised their power to enquiry in section 131 and 133(6) of the Act t...
Income Tax : Punjab and Haryana High Court refused to de-freeze bank account of company alleged to have dishonestly induced individuals/ invest...
Income Tax : Petitioner No.1 is a society registered under the Societies Registration Act of 1860 and the Bombay Public Trusts Act of 1950. It ...
Income Tax : The assessee is into development and construction of a project. The case was selected for scrutiny and AO issued notices u/s 142(1...
Income Tax : ITAT Mumbai held that disallowance under rule 8D(2)(ii) r.w.s. 14A of the Income Tax Rules should be made on average value of inve...
Income Tax : CBDT inserts new Income Tax Rule 8AC -Computation of short term capital gains and written down value under section 50 where deprec...
Income Tax : Income-tax (9th Amendment) Rules, 2019 – Additional depreciation on motor cars and motor vehicles shall be allowed in certai...
Income Tax : A reading of the agreement between STL and the assessee clarifies that a specific amount, i.e., Rs.9 Crores was paid by the assess...
Income Tax : Notification No. 43/2014-Income Tax S.O. 2399(E).—In exercise of the powers conferred by Section 295 read with Section 32 of the...
Goods and Services Tax : In view of this situation, it is necessary that the procedure for the issuing of such certificates should be standardized. Such ce...
CIT v. Yamaha Motor India Pvt. Ltd. (2010) 328 ITR 297 (Delhi) – The issue under consideration in this case is whether depreciation is allowable on the written down value of the entire block, even though the block includes some machinery which has already been discarded and hence, cannot be put to use during the relevant previous year.
B. Raveendran Pillai Vs. CIT (2011) 332 ITR 531 (Kerala HC)- Under section 32(1)(ii), depreciation is allowable on intangible assets, being know-how, patents, copyrights, trade marks, license, franchise, or any other business or commercial rights of similar nature.
Federal Bank Ltd. v. ACIT (2011) 332 ITR 319 (Kerala High Court) – On this issue, the High Court held that the rate of depreciation of 60% is available to computers and there is no ground to treat the communication equipment as computers. Hence, EPABX and mobile phones are not computers and therefore, are not entitled to higher depreciation at 60%.
DCIT, New Delhi Vs M/s NTPC- SAIL Power Supply Co Ltd – Whether after insertion of proviso to section 36(1)(iii), the interest paid on capital borrowed for acquisition of an asset for extension of existing business or profession for any period beginning from the date on which the capital was borrowed for acquisition of the asset till the date on which such asset was first put to use, is rightly not allowed as deduction and the interest income earned on FDRs made from surplus fund and interest earned on margins and advances made for expansion work is rightly assessed under the head `income from other sources’
Hindustan Platinum Pvt. Ltd. Vs ACIT (ITAT Mumbai)- Statement given u/s 131 cannot be the only basis for disallowing the claim of depreciation when it is shown with documentary evidence that the admission made in the statement recorded was under a mistake or misapprehension. Assessee is not entitled to claim loss u/s 28 on account bad debt of the advance given as inter corporate deposit without establishing the fact that it was a trade advance
On merits, s. 32(1)(ii) allows depreciation in respect of know-how, patent, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature. The term “commercial rights” are such rights which are obtained for effectively carrying on business and commerce. “Commerce” is a wide term which encompasses many a facet. Accordingly, any right obtained for carrying on business with effectiveness comes within the sweep of meaning of “intangible asset”. Goodwill, being the positive reputation built by a person over a period of time is of “similar nature” as the other items enumerated in the definition of “intangible assets.
Kerala High Court dismisses Fed. Bank’s appeal, ruling against 60% depreciation on EPABX and mobile phones. No merit found in prior period expenditure dispute.
M/s Frick India Ltd Vs DCIT (ITAT Delhi) – There was a composite agreement titled as ‘intellectual property license and non compete agreement’ vide which several valuable rights including the right to use the trademark, technical know-how including right to export to 30 countries have been granted over a long period of ten years to the assessee, which gave rise to a benefit of enduring nature. However, the AO has allowed the same as revenue expenditure without application of mind and without keeping in view the stand taken in earlier years by the AO which was also confirmed by the CIT(A) on the very same facts.
The assessee, a hotel, incurred expenditure on acquiring licenses and permissions from various government bodies. This was classified as “goodwill” in the books and depreciation was claimed on the ground that it was an “intangible asset” u/s 32(1)(ii). The AO allowed the claim. The CIT passed an order u/s 263 in which he took the view that the AO had not applied his mind to the issue and that the order was “erroneous & prejudicial to the interests of the revenue”. The CIT set aside the assessment order and directed the AO to pass a fresh order. On appeal by the assessee, HELD allowing the appeal: (i) The CIT had not recorded any finding to show how the assessment order was erroneous and prejudicial to the interest of the revenue. Merely because the AO had not examined whether the approvals / registrations etc. amounted to intangible assets and had not applied his mind to the examination and verification of the allowability of depreciation on intangible assets did not mean that the assessment order was erroneous and prejudicial to the interests of the revenue. It was not the case of the CIT that depreciation was not allowable on such items ofintangible assets; (ii) An authority exercising revisional power cannot direct the lower authority to complete the assessment in particular manner. UOI vs. Tata Engineering AIR 1998 SC 287 followed; (iii) On merits, approvals/registrations etc amount to “intangible assets” and entitled to depreciation u/s 32(1) (ii).
Till AY 1996-97 unabsorbed depreciation could be set off against income under any head. From AY 1997-98 to 2001-2002 unabsorbed depreciation could be set off only against business income. From AY 2002-2003 onwards unabsorbed depreciation could again be set off against income under any head of income.
