Page 351 - DCOM301_INCOME_TAX_LAWS_I

Income Tax Laws – I

Notes
Example: Mr. X has following assets as on 1 April 2005:
st
Building Categories

Assets Rate of depreciation W.D.V
Building -A 10% 10, 00,000
Building – B 20% 50, 00,000
Building – C 10% 12, 00,000
Plant - X 20% 24, 00,000
Following Assets were purchased during the year:

Assets Rate of depreciation Purchase price Purchase/Sale Date
Building –D 10% 10, 00,000 Purchase 1/5/05
Building – F 10% 2, 00,000 Purchase 1/2/06
Plant -Y 20% 4, 00,000 Purchase 2/2/06

Following Asses were sold during the year:
Assets Rate of depreciation Sale Price
Building -A 10% 8, 00,000
Building – C 10% 3, 00,000
Plant - X 20% 12, 00,000
Calculate the depreciation as per income tax act.

Solution:
Particulars Building– 10% Building– 20% Plant– 20%
W.D.V as on 1/4/05 22, 00,000 50, 00,000 24, 00,000
Add: Purchases before 180 days of end of year 10, 00,000 nil nil
Add: Purchases after 180 days of end of year 2, 00,000 nil 4, 00,000

Total 34, 00,000 50, 00,000 28, 00,000
Less: Sale 11, 00,000 nil 12, 00,000
Balance 23, 00,000 50, 00,000 16, 00,000
Depreciation
Building 10%- 2, 00,000 x 10% x ½ 1, 00,000
Building 10%- 21, 00,000 x 10% 2, 10,000

Building 20%- 50, 00,000 x 20% 10, 00,000
Plant 20%- nil * nil
W.D.V as on 31/03/06 19, 90,000 40, 00,000 nil
* Depreciation on plant is not charged as there was only one plant in the block and it is sold thus
physically the block cease to exist. In this case there will be a short term capital gain which will
be computed as below:
Full Value of Consideration 12, 00,000

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