Before going into the topic, first let us understand the meaning of basic terms which are relevant to this topic.
Depreciation refers to the measure of gradual reduction in the Value of asset due to wear and tear, effluxion of time and Obsolescence through technology and Market changes.
Residential building refers to a building if 66.67% or more than 66.67% of total built-up area used for Residential purposes.
All the Buildings other than Residential buildings as per Income tax Act are Commercial/Factory buildings.
Depreciation expense can be claimed for the Assets held such as Buildings, Plant & Machinery etc as per applicable Income tax rates which will reduce the Taxable income, ultimately results in reduction of Income tax.
Yes, if the asset value is within Rs. 10,000/- (or) if cash payments done for purchase of asset per day does not exceed Rs. 10,000. So, if cash payments exceed Rs. 10,000 per day, then it won’t be considered as Cost of Acquisition of asset, accordingly Depreciation not allowed as per Section 40(A)(3).
Now, we will see the different situations under which we can claim Depreciation or not as per Income tax Act:
“Information contained herein is for informational purposes only and should not be used in deciding any particular case. The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Though utmost efforts have been made to provide authentic information, it is suggested that to have better understanding and obtaining professional advice after thorough examination of particular situation.”
Prepared On: 8/05/23
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