Section 32 | Depreciation |
Section 43(1) | Actual cost |
Section 43(6) | Written down value-WDV |
income tax rule 5 | Appendix-1 Rate of deprecaion-WDV method
appendix-1A-Rate of deprecaion-SLM method. |
Circular No: – 9-2014, Dated:23-4-2014 | Expenditure on development of road/highway under BOT agreement. |
Circular-No-15-2016-Dated-19-5-2016 | Additional Depreciation u/s 32(1)(iia) of the Income Tax Act, 1961 to publisher and printers. |
Brief introduction of the claim of deprecation:
- Condition for claiming depreciation
- Method Of Depreciation – Straight line method (SLM) – Allowed to undertaking engaged in generation or generation and distribution of power,
- Written Down Value Method (WDV) – other Assesse
- Rate of Depreciation – Refer to Rule 5 of the income tax rules and Appendix I and Appendix 1A.
- For power generation or distribution undertaking -the SLM method rate as per section 32 read with rule 5 and the rate of depreciation as per Appendix 1A. However, they may opt for the WDV method also, and if so opted they continue to follow the WDV method.
- Claiming depreciation is mandatory. Even if depreciation is not claimed, WDV Shall be reduced by the amount of depreciation.
Condition for claiming depreciation
- tangible assets or intangible assets
- Depreciable assets
- Used for the purpose of business or profession
- Used may active used or passively used Capital bus service pvt ltd vs CIT Delhi high court 1980 123 ITR 404
- Assets owned by the assessee
- Ownership is not necessarily legal/registered ownership but must be right to own and used in the business or profession – substance over form – Example Depreciation on hire purchase assets or installment purchase assets- Mysore minerals ltd vs CIT, 1999 SC
- Vehicle registered in the name of directors but used for the business of the company – depreciation allowed to the company but not at a higher rate. CIT vs Arvali Finlease Ltd (2012) 341 ITR 282 (GUJ.
- Assets put to use for the purpose of business or profession
- Unabsorbed depreciation could be carryforward in the succeeding year
- In the case of leasing of assets, depreciation is allowed to the lessor if the leasing business but not to other assessees.
Computation of Depreciation Following WDV Method
- Block of Assets – Sec 2(11)
- Class of Assets
- Actual Cost – Section 43 (1)
- Notional Actual Cost – Explanation to sec 43(1)
- Written Down Value section 43 (6)
- Rate of Depreciation
- Additional Depreciation
- Depreciation in the case of assets acquired during the year
- Depreciation in the case of the sale or disposal of assets during the year
- Unabsorbed Depreciation
- Capital Gain on the sale of all the assets of a block.
- Whether Depreciation claim is mandatory?
Block of Assets Section 2(11)
“block of assets” means a group of assets falling within a class of assets comprising—
(a) tangible assets, being buildings, machinery, plant, or furniture ;
(b) intangible assets, being know-how, patents, copyrights, trademarks, licences, franchises, or any other business or commercial rights of similar nature, 3[not being goodwill of a business or profession,]
in respect of which the same percentage of depreciation is prescribed ;
Section 32(1) In respect of the depreciation of
(i) buildings, machinery, plant or furniture, being tangible assets;
(ii) know-how, patents, copyrights, trademarks, licenses, franchises, or any other business or commercial rights of similar nature, being intangible assets acquired on or after the 1st day of April 1998,
owned, wholly or partly, by the assessee and used for the purposes of the business or profession, the following deductions shall be allowed
(i) in the case of assets of an undertaking engaged in generation or generation and distribution of power, such percentage on the actual cost thereof to the assessee as may be prescribed;
(ii) in the case of any block of assets, such percentage on the written down value thereof as may be prescribed:
Provided that no deduction shall be allowed under this clause in respect of
(a) any motor car manufactured outside India, where such motor car is acquired by the assessee after the 28th day of February, 1975 but before the 1st day of April 2001, unless it is used
(i) in a business of running it on hire for tourists; or
(ii) outside India in his business or profession in another country; and
(b) any machinery or plant if the actual cost thereof is allowed as a deduction in one or more years under an agreement entered into by the Central Government under section 42:
Assets acquired and put to use during the PY for less than 180 days: 50% of depreciation allowable for the whole year.
Provided further that where an asset referred to in clause (i) or clause (ii) or 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 or profession for a period of less than one hundred and eighty days in that previous year, the deduction under this sub-section in respect of such asset shall be restricted to fifty percent. of the amount calculated at the percentage prescribed for an asset under clause (i) or clause (ii) or clause (iia), as the case may be:
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 percent. 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 subsection in the immediately succeeding previous year in respect of such asset:
Provided also that where an asset being commercial vehicle is acquired by the assessee on or after the 1st day of October 1998 but before the 1st day of April, 1999 and is put to use before the 1st day of April 1999 for the purposes of business or profession, the deduction in respect of such asset shall be allowed on such percentage on the written down value thereof as may be prescribed.
Explanation.For the purposes of this proviso,
(a) the expression commercial vehicle means heavy goods vehicle, heavy passenger motor vehicle, light motor vehicle, medium goods vehicle, and medium passenger motor vehicle but does not include maxi-cab, motor-cab, tractor, and road-roller;
(b) the expressions heavy goods vehicle, heavy passenger motor vehicle, light motor vehicle, medium goods vehicle, medium passenger motor vehicle, maxi-cab, motor-cab, tractor, and road roller shall have the meanings respectively as assigned to them in section 2 of the Motor Vehicles Act, 1988 (59 of 1988):
Provided also that, in respect of the previous year relevant to the assessment year commencing on the 1st day of April 1991, the deduction in relation to any block of assets under this clause shall, in the case of a company, be restricted to seventy-five percent. of the amount calculated at the percentage, on the written down value of such assets, prescribed under this Act immediately before the commencement of the Taxation Laws (Amendment) Act, 1991 (2 of 1991):
Depreciation in the case of amalgamation, demerger, etc in the hands of predecessor and successor:
Provided also that the aggregate deduction, in respect of depreciation of buildings, machinery, plant or furniture, being tangible assets or know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets allowable to the predecessor and the successor in the case of succession referred to in clause (xiii), clause (xiiib) and clause (xiv) of section 47 or section 170 or to the amalgamating company and the amalgamated company in the case of amalgamation, or to the demerged company and the resulting company in the case of demerger, as the case may be, shall not exceed in any previous year the deduction calculated at the prescribed rates as if the succession or the amalgamation or the demerger, as the case may be, had not taken place, and such deduction shall be apportioned between the predecessor and the successor, or the amalgamating company and the amalgamated company, or the demerged company and the resulting company, as the case may be, in the ratio of the number of days for which the assets were used by them.
Explanation 1. Where the business or profession of the assessee is carried on in a building not owned by him but in respect of which the assessee holds a lease or other right of occupancy and any capital expenditure is incurred by the assessee for the purposes of the business or profession on the construction of any structure or doing of any work in or in relation to, and by way of renovation or extension of, or improvement to, the building, then, the provisions of this clause shall apply as if the said structure or work is a building owned by the assessee.
Explanation 2.For the purposes of this sub-section written down value of the block of assets shall have the same meaning as in clause (c) of sub-section (6) of section 43.
Explanation 3. For the purposes of this sub-section, the expression assets shall mean
(a) tangible assets, being buildings, machinery, plant, or furniture;
(b) intangible assets, being know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature.
Explanation 4.For the purposes of this sub-section, the expression “know-how” means any industrial information or technique likely to assist in the manufacture or processing of goods or in the working of a mine, oil well or other sources of mineral deposits (including searching for discovery or testing of deposits for the winning of access thereto).
Explanation 5. For the removal of doubts, it is hereby declared that the provisions of this sub-section shall apply whether or not the assessee has claimed the deduction in respect of depreciation in computing his total income;
Additional depreciation -20%- section 32(1)(iia):
(iia) in the case of any new machinery or plant (other than ships and aircraft), which has been acquired and installed after the 31st day of March 2005, by an assessee engaged in the business of manufacture or production of any article or thing or in the business of generation, transmission or distribution of power, a further sum equal to 20% of the actual cost of such machinery or plant shall be allowed as deduction under clause (ii):
Higher Additional depreciation @ 35% to notified backward area undertaking:
Provided that where an assessee, sets up an undertaking or enterprise for manufacture or production of any article or thing, on or after the 1st day of April 2015 in any backward area notified by the Central Government in this behalf, in the State of Andhra Pradesh or in the State of Bihar or in the State of Telangana or in the State of West Bengal, and acquires and installs any new machinery or plant (other than ships and aircraft) for the purposes of the said undertaking or enterprise during the period beginning on the 1st day of April 2015 and ending before the 1st day of April 2020 in the said backward area, then, the provisions of clause (iia) shall have the effect, as if for the words “20%.”, the words “35%.” had been substituted:
Additional depreciation to those who are in printing and publishing Kerala HC/Delhi HC:
CIRCULAR NO.15/2016 [F.NO.279/MISC/140/2015/ITJ]
SECTION 32 OF THE INCOME-TAX ACT, 1961 – DEPRECIATION – ADDITIONAL DEPRECIATION UNDER SECTION 32(1)(iia) FOR ASSESSEES ENGAGED IN BUSINESS OF MANUFACTURE OR PRODUCTION OF AN ARTICLE OR THING
CIRCULAR NO.15/2016 [F.NO.279/MISC/140/2015/ITJ], DATED 19-5-2016
An assessee, engaged in the business of manufacture or production of an article or thing, is eligible to claim additional depreciation under clause (iia) of sub-section (1) of section 32 of the Income-tax Act, 1961 (hereinafter referred to as the Act) in addition to the depreciation allowance under sub-section (1) of section 32 of the Act.
- Whether or not an assessee engaged in printing or printing and publishing is eligible for grant of additional depreciation under clause (iia) of sub-section (1) of section 32 of the Act, has been a contentious issue. In other words, whether printing or printing and publishing amounts to the manufacture or production of an article or thing has been contested in legal forums.
- The Hon’ble Kerala High Court in the case of Mathrubhoomi Printing & Publishing Co. vide its judgment dated 16.2.2015 in ITA No 23 of 2015 relied upon the Hon’ble Delhi High Court judgment dated 31.5.2013 in ITA No 49 of 1996 in the case of Delhi Press Patra Prakashan Ltd.1 and held that printing and publishing activity is a manufacturing activity and therefore, the assessee is eligible for grant of additional depreciation u/s 32(1)(iia).
- The Board has accepted the position that printing or printing and publishing amounts to the manufacture or production of an article or thing. The judgments of the Hon’ble Delhi and Kerala High Courts on this issue have been accepted. Thus the issue relating to the grant of deprecation u/s 32(1) (iia) has not been further contested, though the Delhi High Court judgment has been contested on other issues.
- It is, therefore, a settled position that the business of printing or printing, and publishing amounts to the manufacture or production of an article or thing and is accordingly eligible for additional depreciation u/s 32(1)(iia) of the Act. Henceforth, appeals may not be filed on this ground by officers of the Department, and those already filed, in Courts/Tribunals may be withdrawn/not pressed upon.
- The above may be brought to the notice of all concerned.
No additional depreciation:
Provided further that no deduction shall be allowed in respect of—
(A) any machinery or plant which, before its installation by the assessee, was used either within or outside India by any other person; or
(B) any machinery or plant installed in any office premises or any residential accommodation, including accommodation in the nature of a guest-house; or
(C) any office appliances or road transport vehicles; or
(D) any machinery or plant, the whole of the actual cost of which is allowed as a deduction (whether by way of depreciation or otherwise) in computing the income chargeable under the head “Profits and gains of business or profession” of any one previous year;
Assets sold, demolished, etc, and consideration & money payable received is less than WDV- actual deficiency allowed as deprecation
(iii) in the case of any building, machinery, plant or furniture in respect of which depreciation is claimed and allowed under clause (i) and which is sold, discarded, demolished or destroyed in the previous year (other than the previous year in which it is first brought into use), the amount by which the money payable in respect of such building, machinery, plant or furniture, together with the amount of scrap value, if any, fall short of the written down value thereof:
Provided that such deficiency is actually written off in the books of the assessee.
Explanation.—For the purposes of this clause,—
(1) “money payable” in respect of any building, machinery, plant or furniture includes—
(a) any insurance, salvage or compensation money payable in respect thereof;
(b) where the building, machinery, plant, or furniture is sold, the price for which it is sold,
so, however, that where the actual cost of a motor car is, in accordance with the proviso to clause (1) of section 43, taken to be twenty-five thousand rupees, the money payable in respect of such motor car shall be taken to be a sum which bears to the amount for which the motor car is sold or, as the case may be, the amount of any insurance, salvage or compensation money payable in respect thereof (including the amount of scrap value, if any) the same proportion as the amount of twenty-five thousand rupees bears to the actual cost of the motor car to the assessee as it would have been computed before applying the said proviso;
(2) “sold” includes a transfer by way of exchange or a compulsory acquisition under any law for the time being in force but does not include a transfer, in a scheme of amalgamation, of any asset by the amalgamating company to the amalgamated company where the amalgamated company is 26 an Indian company or in a scheme of amalgamation of a banking company, as referred to in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949) with a banking institution as referred to in sub-section (15) of section 45 of the said Act, sanctioned and brought into force by the Central Government under sub-section (7) of section 45 of that Act of any asset by the banking company to the banking institution.
Carryforward of unabsorbed deprecation and set off in succeeding previous years:
Section 32 (2) Where, in the assessment of the assessee, full effect cannot be given to any allowance under sub-section (1) in any previous year, owing to there being no profits or gains chargeable for that previous year, or owing to the profits or gains chargeable being less than the allowance, then, subject to the provisions of sub-section (2) of section 72 and sub-section (3) of section 73, the allowance or the part of the allowance to which effect has not been given, as the case may be, shall be added to the amount of the allowance for depreciation for the following previous year and deemed to be part of that allowance, or if there is no such allowance for that previous year, be deemed to be the allowance for that previous year, and so on for the succeeding previous years.
Depreciation- Rule 5 and Appendix 1 and 1A.
Rule 5. (1) Subject to the provisions of sub-rule (2), the allowance under clause (ii) of sub-section (1) of section 32 in respect of the depreciation of any block of assets shall be calculated at the percentages specified in the second column of the Table in Appendix I to these rules on the written down value of the such block of assets as are used for the purposes of the business or profession of the assessee at any time during the previous year :
Depreciation above 40% is limited to 40% in certain cases:
Provided that the allowance under clause (ii) of sub-section (1) of section 32 in respect of depreciation of any block of assets entitled to more than forty percent shall be restricted to forty percent on the written down value of the such block of assets in case of—
(i) a domestic company which has exercised an option under sub-section (4) of section 115BA, or under sub-section (5) of section 115BAA, or under sub-section (7) of section 115BAB; or
(ii) an individual or Hindu undivided family which has exercised an option under sub-section (5) of section 115BAC; or
(iii) a co-operative society resident in India which has exercised an option under sub-section (5) of section 115BAD:
Provided further that, for the purposes of section 115BAA, if the following conditions are satisfied, namely:—
(i) option under sub-section (5) thereof is exercised for a previous year relevant to the assessment year beginning on the 1st day of April 2020;
(ii) there is a depreciation allowance, in respect of a block of asset, from any earlier assessment year or allowance of unabsorbed depreciation deemed so under section 72A, which is attributable to the provisions in clause (iia) of sub-section (1) of section 32; and
(iii) such depreciation or allowance for unabsorbed depreciation is not allowed to be set off under clause (ii) or clause (iii) of sub-section (2) thereof, the written down value of the block of asset as on the 1st day of April, 2019 shall be increased by such depreciation or allowance for unabsorbed depreciation not allowed to be set off:
WDV shall be increased by depreciation not allowed to be set off:
Provided also that, for the purposes of section 115BAC and section 115BAD, if the following conditions are satisfied, namely:—
(i) the option under sub-section (5) of the respective section is exercised for a previous year relevant to the assessment year beginning on the 1st day of April 2021;
(ii) there is a depreciation allowance, in respect of a block of asset, from any earlier assessment year which is attributable to the provisions in clause (iia) of sub-section (1) of section 32; and
(iii) such depreciation is not allowed to be set off under sub-clause (a) of clause (ii) of sub-section (2) of section 115BAC or clause (ii) of sub-section (2) of section 115BAD,
the written down value of the block of asset as on the 1st day of April 2020 shall be increased by such depreciation not allowed to be set off.
Deprecation to undertaking engaged in generation or generation and distribution of power:
Rule 5 (1A) The allowance under clause (i) of sub-section (1) of section 32 of the Act in respect of the depreciation of assets acquired on or after 1st day of April 1997 shall be calculated at the percentage specified in the second column of the Table in Appendix IA of these rules on the actual cost thereof to the assessee as are used for the purposes of the business of the assessee at any time during the previous year :
Provided that the aggregate depreciation allowed in respect of any asset for different assessment years shall not exceed the actual cost of the said asset :
Option to avail depreciation by specified undertaking as per appendix-1 instead of appendix1A:
Provided further that the undertaking specified in clause (i) of sub-section (1) of section 32 of the Act may, instead of the depreciation specified in Appendix IA, at its option, be allowed depreciation under sub-rule (1) read with Appendix I, if such option is exercised before the due date for furnishing the return of income under sub-section (1) of section 139 of the Act,
- for the assessment year 1998-99, in the case of an undertaking which began to generate power prior to 1st day of April 1997; and
- for the assessment year relevant to the previous year in which it begins to generate power, in case of any other undertaking :
Provided also that any such option once exercised shall be final and shall apply to all the subsequent assessment years.
(2) Where any new machinery or plant is installed during the previous year relevant to the assessment year commencing on or after the 1st day of April 1988, for the purposes of the business of manufacture or production of any article or thing and such article or thing—
- is manufactured or produced by using any technology (including any process) or other know-how developed in, or
- is an article or thing invented in,
a laboratory owned or financed by the Government or a laboratory owned by a public sector company or a University or an institution recognized in this behalf by the Secretary, Department of Scientific and Industrial Research, Government of India,
such plant or machinery shall be treated as a part of a block of assets qualifying for depreciation at the rate of [40] percent of written down value, if the following conditions are fulfilled, namely:—
(i) the right to use such technology (including any process) or other know-how or to manufacture or produce such article or thing has been acquired from the owner of such laboratory or any person deriving title from such owner ;
(ii) the return furnished by the assessee for his income, or the income of any other person in respect of which he is assessable, for any previous year in which the said machinery or plant is acquired, shall be accompanied by a 95certificate from the Secretary, Department of Scientific and Industrial Research, Government of India, to the effect that such article or thing is manufactured or produced by using such technology (including any process) or other know-how developed in such laboratory or is an article or thing invented in such laboratory ; and
(iii) the machinery or plant is not used for the purpose of the business of manufacture or production of any article or thing specified in the list in the Eleventh Schedule to the Act.
Explanation.—For the purposes of this sub-rule,—
- “laboratory financed by the Government” means a laboratory owned by anybody [including a society registered under the Societies Registration Act, 1860 (21 of 1860)], and financed wholly or mainly by the Government ;
- “public sector company” means any corporation established by or under any Central, State or Provincial Act or a Government company96 as defined in section 617 of the Companies Act, 1956 (1 of 1956) ; and
- “University” means a University established or incorporated by or under a Central, State or Provincial Act and includes an institution declared under section 3 of the University Grants Commission Act, 1956 (3 of 1956), to be a University for the purposes of that Act.
NEW APPENDIX I
[Effective from the assessment year 2006-07 onwards]
[See rule 5]
TABLE OF RATES AT WHICH DEPRECIATION IS ADMISSIBLE
Block of assets | Depreciation allowance
as percentage of Written down value |
|||||
1 | 2 | |||||
PART A | ||||||
TANGIBLE ASSETS | ||||||
I. Building [See Notes 1 to 4 below this Table] | ||||||
(1) | Buildings which are used mainly for residential purposes except hotels and boarding houses | 5 | ||||
(2) | Buildings other than those used mainly for residential purposes and not covered by sub-items (1) above and (3) below | 10 | ||||
(3) | Buildings acquired on or after the 1st day of September 2002 for installing machinery and plant forming part of water supply project or water treatment system and which is put to use for the purpose of business of providing infrastructure facilities under clause (i) of sub-section (4) of section 80-IA | 40 | ||||
(4) | Purely temporary erections such as wooden structures | 40 | ||||
II. Furniture and fittings | ||||||
Furniture and fittings including electrical fittings | 10 | |||||
[See Note 5 below this Table] | ||||||
III. Machinery and Plant | ||||||
(1) | Machinery and plant other than those covered by sub-items (2), (3), and (8) below: | 15 | ||||
(2) | (i) | Motor cars, other than those used in a business of running them on hire, acquired or put to use on or after the 1st day of April 1990 except those covered under entry (ii); | 15 | |||
(ii) | Motor cars, other than those used in a business of running them on hire, are acquired on or after the 23rd day of August 2019 but before the 1st day of April 2020 and is put to use before the 1st day of April 2020. | 30 | ||||
(3) | (i) | Aeroplanes – Aeroengines | 40 | |||
(ii) | (a) Motor buses, motor lorries and motor taxis used in a business of running them on hire other than those covered under entry (b). | 30 | ||||
(b) Motor buses, motor lorries and motor taxis used in a business of running them on hire, acquired on or after the 23rd day of August, 2019 but before the 1st day of April, 2020 and is put to use before the 1st day of April, 2020. | 45 | |||||
(iii) | Commercial vehicle which is acquired by the assessee on or after the 1st day of October, 1998, but before the 1st day of April, 1999 and is put to use for any period before the 1st day of April, 1999 for the purposes of business or profession in accordance with the third proviso to clause (ii) of sub-section (1) of section 32 [See Note 6 below this Table] | 40 | ||||
(iv) | New commercial vehicle which is acquired on or after the 1st day of October, 1998, but before the 1st day of April, 1999 in replacement of condemned vehicle of over 15 years of age and is put to use for any period before the 1st day of April, 1999 for the purposes of business or profession in accordance with the third proviso to clause (ii) of sub-section (1) of section 32 [See Note 6 below this Table] | 40 | ||||
(v) | The new commercial vehicle which is acquired on or after the 1st day of April 1999 but before the 1st day of April 2000 in replacement of condemned vehicle of over 15 years of age and is put to use before the 1st day of April 2000 for the purposes of business or profession in accordance with the second proviso to clause (ii) of sub-section (1) of section 32 [See Note 6 below this Table] | 40 | ||||
(vi) | New commercial vehicle which is acquired on or after the 1st day of April, 2001 but before the 1st day of April, 2002 and is put to use before the 1st day of April, 2002 for the purposes of business or profession [See Note 6 below this Table] | 40 | ||||
(via) | New commercial vehicle which is acquired on or after the 1st day of January, 2009 but before the 1st day of 7[October], 2009 and is put to use before the 1st day of 7[October], 2009 for the purposes of business or profession [See paragraph 6 of the Notes below this Table] | 40 | ||||
(vii) | Moulds used in rubber and plastic goods factories | 30 | ||||
(viii) | Air pollution control equipment, being— | |||||
(a) | Electrostatic precipitation systems | |||||
(b) | Felt-filter systems | |||||
(c) | Dust collector systems | 40 | ||||
(d) | Scrubber-counter current/venturi/packed bed/cyclonic scrubbers | |||||
(e) | Ash handling system and evacuation system | |||||
(ix) | Water pollution control equipment, being— | |||||
(a) | Mechanical screen systems | |||||
(b) | Aerated detritus chambers (including air compressor) | |||||
(c) | Mechanically skimmed oil and grease removal systems | |||||
(d) | Chemical feed systems and flash mixing equipment | |||||
(e) | Mechanical flocculators and mechanical reactors | |||||
(f) | Diffused air/mechanically aerated activated sludge systems | |||||
(g) | Aerated lagoon systems | |||||
(h) | Biofilters | |||||
(i) | Methane-recovery anaerobic digester systems | 40 | ||||
(j) | Air floatation systems | |||||
(k) | Air/steam stripping systems | |||||
(l) | Urea Hydrolysis systems | |||||
(m) | Marine outfall systems | |||||
(n) | Centrifuge for dewatering sludge | |||||
(o) | Rotating biological contractor or bio-disc | |||||
(p) | Ion exchange resin column | |||||
(q) | Activated carbon column | |||||
(x) | (a) | Solid waste, control equipment being – caustic/lime/chrome/mineral/cryolite recovery systems | 9[40] | |||
(b) | Solid waste recycling and resource recovery systems | |||||
(xi) | Machinery and plant, used in the semiconductor industry covering all Integrated Circuits (ICs) (excluding hybrid integrated circuits) ranging from Small Scale Integration (SSI) to Large Scale Integration/Very Large Scale Integration (LSI/VLSI) as also discrete semiconductor devices such as diodes, transistors, thyristors, triacs, etc., other than those covered by entries (viii), (ix) and (x) of this sub-item and sub-item (8) below. | 30 | ||||
(xia) | Life saving medical equipment, being— | |||||
(a) | D.C. Defibrillators for internal use and pace makers | |||||
(b) | Haemodialysors | |||||
(c) | Heart lung machine | |||||
(d) | Cobalt Therapy Unit | |||||
(e) | Colour Doppler | |||||
(f) | SPECT Gamma Camera | |||||
(g) | Vascular Angiography System including Digital Subtraction Angiography | |||||
(h) | Ventilator used with anaesthesia apparatus | |||||
(i) | Magnetic Resonance Imaging System | |||||
(j) | Surgical Laser | 40 | ||||
(k) | Ventilator other than those used with anaesthesia | |||||
(l) | Gamma knife | |||||
(m) | Bone Marrow Transplant Equipment including silastic long-standing intravenous catheters for chemotherapy | |||||
(n) | Fibre optic endoscopes including, Paediatric resectoscope/audit resectoscope, Peritoneoscopes, Arthoscope, Microlaryngoscope, Fibreoptic Flexible Nasal Pharyngo Bronchoscope, Fibreoptic Flexible Laryngo Bronchoscope, Video Laryngo Bronchoscope and Video Oesophago Gastroscope, Stroboscope, Fibreoptic Flexible Oesophago Gastroscope | |||||
(o) | Laparoscope (single incision) | |||||
4) | Containers made of glass or plastic used as re-fills | 40 | ||||
(5) | Computers including computer software (See Note 7 below this Table) | 40 | ||||
(6) | Machinery and plant, used in the weaving, processing, and garment sector of the textile industry, which is purchased under TUFS on or after the 1st day of April, 2001 but before the 1st day of April, 2004 and is put to use before the 1st day of April, 2004 [See Note 8 below this Table] | 40 | ||||
(7) | Machinery and plant, acquired and installed on or after the 1st day of September, 2002 in a water supply project or a water treatment system and which is put to use for the purpose of business of providing infrastructure facility under clause (i) of sub-section (4) of section 80-IA [See Notes 4 and 9 below this Table] | 40 | ||||
(8) | (i) | Wooden parts used in artificial silk manufacturing machinery | ||||
(ii) | Cinematograph films – bulbs of studio lights | |||||
(iii) | Match factories – Wooden match frames | |||||
(iv) | Mines and quarries : | |||||
(a) | Tubs winding ropes, haulage ropes and sand stowing pipes | 40 | ||||
(b) | Safety lamps | |||||
(v) | Salt works – Salt pans, reservoirs and condensers, etc., made of earthy, sandy or clayey material or any other similar material | |||||
(vi) | Flour mills – Rollers | |||||
(vii) | Iron and steel industry – Rolling mill rolls | 40 | ||||
(viii) | Sugar works – Rollers | |||||
(ix) | Energy saving devices, being— | |||||
A. | Specialised boilers and furnaces : | |||||
(a) | Ignifluid/fluidized bed boilers | |||||
(b) | Flameless furnaces and continuous pusher type furnaces | 40 | ||||
(c) | Fluidized bed type heat treatment furnaces | |||||
(d) | High efficiency boilers (thermal efficiency higher than 75 per cent in case of coal fired and 80 per cent in case of oil/gas fired boilers) | |||||
B. | Instrumentation and monitoring system for monitoring energy flows : | |||||
(a) | Automatic electrical load monitoring systems | |||||
(b) | Digital heat loss meters | |||||
(c) | Micro-processor based control systems | |||||
(d) | Infra-red thermography | 40 | ||||
(e) | Meters for measuring heat losses, furnace oil flow, steam flow, electric energy and power factor meters | |||||
(f) | Maximum demand indicator and clamp on power meters | |||||
(g) | Exhaust gases analyzer | |||||
(h) | Fuel oil pump test bench | |||||
C. | Waste heat recovery equipment: | |||||
(a) | Economisers and feed water heaters | |||||
(b) | Recuperators and air pre-heaters | |||||
(c) | Heat pumps | 40 | ||||
(d) | Thermal energy wheel for high and low temperature waste heat recovery | |||||
D. | Co-generation systems: | |||||
(a) | Back pressure pass out, controlled extraction, extraction-cum-condensing turbines for co-generation along with pressure boilers | |||||
(b) | Vapour absorption refrigeration systems | 40 | ||||
(c) | Organic rankine cycle power systems | |||||
(d) | Low inlet pressure small steam turbines | |||||
E. | Electrical equipment: | |||||
(a) | Shunt capacitors and synchronous condenser systems | |||||
(b) | Automatic power cut-off devices (relays) mounted on individual motors | |||||
(c) | Automatic voltage controller | |||||
(d) | Power factor controller for AC motors | |||||
(e) | Solid-state devices for controlling motor speeds | |||||
(f) | Thermally energy-efficient stenters (which require 800 or less kilocalories of heat to evaporate one kilogram of water) | |||||
(g) | Series compensation equipment | 40 | ||||
(h) | Flexible AC Transmission (FACT) devices – Thyristor controlled series compensation equipment | |||||
(i) | Time of Day (ToD) energy meters | |||||
(j) | Equipment to establish transmission highways for National Power Grid to facilitate transfer of surplus power of one region to the deficient region | |||||
(k) | Remote terminal units/intelligent electronic devices, computer hardware/software, router/bridges, other required equipment and associated communication systems for supervisory control and data acquisition systems, energy management systems and distribution management systems for power transmission systems | |||||
(l) | Special energy meters for Availability Based Tariff (ABT) | |||||
F. | Burners: | |||||
(a) | 0 to 10 percent excess air burners | |||||
(b) | Emulsion burners | 40 | ||||
(c) | Burners using air with high pre-heat temperature (above 300°C) | |||||
G. | Other equipment : | |||||
(a) | Wet air oxidation equipment for recovery of chemicals and heat | |||||
(b) | Mechanical vapour recompressors | |||||
(c) | Thin film evaporators | |||||
(d) | Automatic micro-processor based load demand controllers | 40 | ||||
(e) | Coal-based producer gas plants | |||||
(f) | Fluid drives and fluid couplings | |||||
(g) | Turbo charges/super-charges | |||||
(h) | Sealed radiation sources for radiation processing plants | |||||
(x) | Gas cylinders including valves and regulators | 40 | ||||
(xi) | Glass manufacturing concerns – Direct fire glass melting furnaces | 40 | ||||
(xii) | Mineral oil concerns: | |||||
(a) | Plant used in field operations (above ground) distribution – Returnable packages | 40 | ||||
(b) | A plant used in field operations (below ground), but not including kerbside pumps including underground tanks and fittings used in field operations (distribution) by mineral oil concerns | |||||
(c) | Oil wells not covered in clauses (a) and (b) | 15 | ||||
(xiii) | Renewable energy devices being — | |||||
(a) | Flat plate solar collectors | |||||
(b) | Concentrating and pipe-type solar collectors | |||||
(c) | Solar cookers | |||||
(d) | Solar water heaters and systems | |||||
(e) | Air/gas/fluid heating systems | |||||
(f) | Solar crop driers and systems | |||||
(g) | Solar refrigeration, cold storage and air conditioning systems | 40 | ||||
(h) | Solar steels and desalination systems | |||||
(i) | Solar power-generating systems | |||||
(j) | Solar pumps based on solar-thermal and solar-photovoltaic conversion | |||||
(k) | Solar-photovoltaic modules and panels for water pumping and other applications | |||||
(l) | Wind mills and any specially designed devices which run on wind mills 19[installed on or after the 1st day of April 2014] | |||||
(m) | Any special devices including electric generators and pumps running on wind energy 19[installed on or after the 1st day of April, 2014] | |||||
(n) | Biogas-plant and biogas-engines | |||||
(o) | Electrically operated vehicles including battery-powered or fuel-cell-powered vehicles | 40 | ||||
(p) | Agricultural and municipal waste conversion devices producing energy | |||||
(q) | Equipment for utilizing ocean waste and thermal energy | |||||
(r) | Machinery and plant used in the manufacture of any of the above sub-items | |||||
(9) | (i) | Books owned by assessees carrying on a profession— | ||||
(a) | Books, being annual publications | 40 | ||||
(b) | Books, other than those covered by entry (a) above | 40 | ||||
(ii) | Books owned by assessees carrying on business in running lending libraries | 40 | ||||
IV. Ships | ||||||
(1) | Ocean-going ships including dredgers, tugs, barges, survey launches, and other similar ships used mainly for dredging purposes and fishing vessels with a wooden hull | 20 | ||||
(2) | Vessels ordinarily operating on inland waters, not covered by sub-item (3) below | 20 | ||||
(3) | Vessels ordinarily operating on inland waters being speed boats [See Note 10 below this Table] | 20 | ||||
PART B | ||||||
INTANGIBLE ASSETS | ||||||
Know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature | 25 |
Notes:
1. | “Buildings” include roads, bridges, culverts, wells, and tubewells. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2. | A building shall be deemed to be a building used mainly for residential purposes if the built-up floor area thereof used for residential purposes is not less than sixty-six and two-thirds percent of its total built-up floor area and shall include any such building in the factory premises. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3. |
In respect of any structure or work by way of renovation or improvement in or in relation to a building referred to in Explanation 1 of clause (ii) of sub-section (1) of section 32, the percentage to be applied will be the percentage specified against sub-item (1) or (2) of item 1 as may be appropriate to the class of building in or in relation to which the renovation or improvement is effected. Where the structure is constructed or the work is done by way of extension of any such building, the percentage to be applied would be such percentage as would be appropriate, as if the structure or work constituted a separate building. |
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4. | The water treatment system includes a system for desalination, demineralisation and purification of water. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5. | “Electrical fittings” include electrical wiring, switches, sockets, other fittings and fans, etc. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6. | “Commercial vehicle” means “heavy goods vehicle”, “heavy passenger motor vehicle”, “light motor vehicle”, “medium goods vehicle” and “medium passenger motor vehicle” but does not include “maxi-cab”, “motor-cab”, “tractor” and “road-roller”. The expressions “heavy goods vehicle”, “heavy passenger motor vehicle”, “light motor vehicle”, “medium goods vehicle”, “medium passenger motor vehicle”, “maxi-cab”, “motor-cab”, “tractor” and “road-roller” shall have the meanings respectively assigned to them in section 2 of the Motor Vehicles Act, 1988 (59 of 1988).22 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7. | “Computer software” means any computer program recorded on any disc, tape, perforated media or other information storage device. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8. | “TUFS” means Technology Upgradation Fund Scheme announced by the Government of India in the form of a Resolution of the Ministry of Textiles vide No. 28/1/99-CTI of 31-3-1999. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
9. | Machinery and plant includes pipes needed for delivery from the source of supply of raw water to the plant and from the plant to the storage facility. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
10. | “Speed boat” means a motor boat driven by a high-speed internal combustion engine capable of propelling the boat at a speed exceeding 24 kilometers per hour in still water and so designed that when running at a speed, it will plane, i.e., its bow will rise from the water.
Depreciation for undertaking engaged in generation or generation and distribution of power: APPENDIX IA TABLE OF RATES AT WHICH DEPRECIATION IS ADMISSIBLE [See rule 5(1A)]
Conclusion: depreciation is an important allowance under income tax against gross revenue where taxable income could be reduced and income tax liability could be reduced but no deprecation on the GST portion of the actual cost of assets for which input tax credit is available and availed. in fact, the ITC portion shall not be part of the actual cost under section 43(1) and therefore no depreciation on that portion. |