Section 32(1)(iia) ADDITIONAL DEPRECIATION
Section 32(1)(iia) ADDITIONAL DEPRECIATION
Conditions to be Fulfilled (Eligible Assesses)
•
Deduction is available to all assessees who are engaged
in the business of:
❑
D manufacture or production of any article
or thing; or
❑ generation, transmission or distribution of electricity.
• The assessee has purchased and installed new plant & machinery.
Meaning
of 'New Plant & Machinery'
'New plant & machinery' does not include:
• Second hand plant & machinery whether Indian or imported (ie plant & machinery should be brand new)
• Any plant & machinery installed in any office premises or any residential accommodation like guest houses (ie plant & machinery should be installed at factory)
• Any office appliances including computers or computer software
• Any vehicle • Ship or aircraft
• Any plant & machinery, the actual cost of which is allowed to be debited to P&L A/c (ie plant & machinery for which deduction is claimed u/s 35, 35AD, etc)
Amount of Additional Depreciation
Case I: If new plant & machinery has been put to use during the year of acquisition:
(a) Put to use for 180 days or more: One-time additional depreciation is allowed @ 20% of the actual cost of the plant & machinery.
(b) Put to use for less than 180 days: One-time additional depreciation is allowed @ 10% of the actual cost of the plant & machinery. The balance 10% is allowed in the next year.
Case II: If new plant & machinery has been acquired during one previous year and has been subsequently put to use during a different year:
In such cases, one-time additional depreciation is allowed @ 20% of the actual cost of the plant & machinery in the year in which the asset has been put to use. The number of days for which the asset has been put to use during such year is irrelevant.
Special Provision for Units Set-up in Certain States
•
This special provision is applicable to all kinds of assessees provided all the conditions listed below are fulfilled:
❑ The assessee sets up an undertaking/enterprise for manufacture or production of any article or thing on or after April 1, 2015.
❑ Such undertaking must be set up in any backward area (notified by the Central Government) in Andhra Pradesh, Bihar, Telengana and West Bengal.
❑ The assessee acquires and installs a 'new plant and machinery' for the purposes of such undertaking on or after April 1, 2015 but before April 1, 2020.
• If all the above conditions are fulfilled, the rate of additional depreciation shall be taken to be 35% instead of 20%. Where the new plant & machinery has been put to use for less than 180 days in the year of acquisition, additional depreciation ® 17.5% shall be allowed in the first year and the balance 17.5% shall be allowed in the next year.
Points to be Noted
•
The amount of additional depreciation is in addition
to the normal
depreciation.
• Further, the amount of additional depreciation is reduced from the actual cost of the plant & machinery to arrive at its WDV value.
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