ADDITIONAL DEPRECIATION-Section 32(1)(iia)
- Additional depreciation is available in case of new machinery or plant (other than ships and aircraft) acquired and installed by the assessee.
- Assessee has to be engaged in the business of manufacture or production of any article or thing or in the business of generation or generation and distribution of power generation, transmission or distribution of power. [Amendment made by the F.A. 2016 w.e.f. AY 2017-18]
- Additional depreciation shall be allowed at the rate of 20% of the actual cost of such machinery or plant.
- If such plant or machinery has been put to use for less than 180 days in the previous year, 50% of additional depreciation shall be provided in next year. [Refer Third Proviso to clause (ii)]
Additional Depreciation at enhanced rate -First Proviso to Section 32(1)(iia) [Inserted by the F.A. 2015, w.e.f A.Y. 2016-17]
Where an assessee, sets up an undertaking or enterprise for manufacture or production of any article or thing, on or after the 1st day of April, 2015 in any backward area notified by the Central Government in this behalf,
in the State of Andhra Pradesh or
in the State of Bihar or
in the State of Telangana or
in the State of West Bengal,
and acquires and installs any new machinery or plant (other than ships and aircraft) for the purposes of the said undertaking or enterprise during the period beginning on the 1st day of April, 2015 and ending before the 1st day of April, 2020 in the said backward area, then, the additional depreciation shall be provided at the rate of 35%.
- Rate of additional depreciation for purchase of eligible assets in the notified backward area of State of Andhra Pradesh, Bihar, Telangana or West Bengal shall be 35% instead of 20%. This amendment will encourage manufacturing activity in these states.
50% additional depreciation in next year in case assets acquired during second half-Third Proviso to Section 32(1)(ii)-[Inserted by the F.A. 2015, w.e.f. A.Y. 2016-17]
Where an asset referred to in section 32(1)(iia) or the first proviso to 32(1)(iia), is acquired by the assessee during the previous year and is put to use for the purposes of business for a period of less than 180 days in that previous year, and the deduction under this sub-section in respect of such asset is restricted to 50% of the amount calculated at the percentage prescribed for an asset under clause (iia) for that previous year, then, the deduction for the balance 50% of the amount calculated at the percentage prescribed for such asset under 32(1)(iia) shall be allowed under this sub-section in the immediately succeeding previous year in respect of such asset.
- Before this amendment, assessee was allowed only 50% of additional depreciation if asset which is eligible for additional depreciation is purchased during second half of the previous year. This inconsistency vis-à-vis purchase of asset in first half motivates assessee to defer investment for first half of next year.
- Therefore, after this amendment if assets which is eligible for additional depreciation is purchased during second half of the previous year remaining 50% of additional depreciation shall be allowed in immediate next previous year.
Following assets are not eligible for additional depreciation-Second Proviso
No deduction of additional depreciation shall be allowed in respect of—
- any machinery or plant which, before its installation by the assessee, was used either within or outside India by any other person; or
- any machinery or plant installed in any office premises or any residential accommodation, including accommodation in the nature of a guest-house; or
- any office appliances or road transport vehicles; or
- any machinery or plant, the whole of the actual cost of which is allowed as a deduction (whether by way of depreciation or otherwise) in computing the income chargeable under the head “Profits and gains of business or profession” of any one previous year.
Printing and Publishing business is manufacturing business and eligible for additional depreciation
|The CBDT vide Circular No. 15/2016 dt. 19.05.2016 notified that printing and publishing amounts to manufacture or production of article or thing and is eligible for additional depreciation u/s 32 (1)(iia) of the Act.
The Board has accepted the judgement of the Hon’ble Kerala High Court in the case of Mathrubhoomi Printing & Publishing Co. (dt. 16.02.2105 in ITA No. 23 of 2015) and the Hon’ble Delhi High Court in the case of Delhi Press Patra Prakashan Ltd. (dt. 31.05.2013 in ITA No. 49 of 1996) that assessee engaged in the business of Printing and Publishing is eligible for additional depreciation.