Depreciation

 Q: Whether claim for depreciation under Income Tax Act should be Assessee wise or business wise?

Ans: It is dependent on the conditions whether claim for depreciation under Income Tax Act on the basis of Assessee Wise or Business wise. 

Depreciation under the Income Tax Act is a deduction allowed for the reduction in the real value of a tangible or intangible asset used by a taxpayer. The concept of depreciation is used for the purpose of writing off the cost of an asset over its useful life.

An Assesssee can avail deduction for depreciation, only if it satisfies the following conditions:

•      The assets must be owned, wholly or partly, by the assessee.

• The assets must be in use for the business or profession of the taxpayer. If the assets are not used exclusively for the business, but for other purposes as well, depreciation allowable would be proportionate to the use of business purpose. The Income Tax Officer also has the right to determine the proportionate part of the depreciation under Section 38 of the Act.

• Co-owners can claim depreciation to the extent of the value of the assets owned by each co-owner.

• You cannot claim depreciation on the cost of land.

• Depreciation is mandatory from A.Y. 2002-03 and shall be allowed or deemed to have been allowed as a deduction irrespective of a claim made by a taxpayer in the profit & loss account.