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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