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Unit 9: Income under the Head Business and Profession

(c) any sum on account of land revenue, local rates or municipal taxes; and Notes
(d) amount of any premium in respect of insurance against risk of damage or destruction
of the premises.

Applications of section 43B: Land revenue, local rates or municipal taxes are deductible
subject to the conditions as specified by section 43B.

Did u know? In cases where the assessee uses the premises partly for his business or
professional purposes and partly for other purposes the deduction allowable under this
section is a sum proportionate to that part of the expenses which are attributable to the
premises used for business or professional purposes.
2. Repairs and insurance of machinery, plant and furniture: The expenditure incurred on
current repairs (not being capital expenditure) and insurance in respect of plant, machinery
and furniture used for business purposes is allowable as deduction under section 31.

3. Depreciation: Depreciation shall be determined according to the provisions of section 32.
Conditions for claiming depreciation: In order to avail depreciation, one should satisfy the
following conditions:

Table 9.1: Conditions for Claiming Depreciation

Condition 1 Asset must be owned by the assessee.
Condition 2 It must be used for the purpose of business or profession.
Condition 3 It should be used during the relevant previous year.
Condition 4 Depreciation is available on tangible as well as intangible assets.

The asset should be owned by the assessee or the assessee should be the co-owner of the
asset. The asset, in respect of which depreciation is claimed, must have been used for the
purpose of business or profession.
The asset, in respect of which depreciation is claimed, must have been used for the purpose
of business. Normal depreciation (i.e., full year’s depreciation) is available if an asset is
put to use at least for some time during the previous year. However, depreciation allowance
is limited to 50 per cent of normal depreciation, if the following two conditions are
satisfied:

a. where an asset is acquired during the previous year; and
b. it is put to use for the purpose of business or profession for less than 180 days during
that year.

Tangible assetsIntangible assets acquired after March 31, 1998: Building, machinery, plant
or furniture, Know-how, patents, copyrights, trademarks, licenses, franchises or any other
business or commercial rights of similar nature.
Depreciation is available on tangible as well as intangible assets: Under the Income-tax
Act, one can claim depreciation in respect of the following asset:
a. In case of a tangible asset depreciation can be claimed for assets including Building,
machinery, plant or furniture.

b. In case of any intangible asset acquired after March 31, 1998, depreciation can be
claimed on assets like Know-how, patents, copyrights, trademarks, licenses, franchises
or any other business or commercial rights of similar nature.

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