Depreciation

[Guest]

Respected sirI provide your valuable opinion on the issue that when an asset forms part of the block of assets.Suppose an asset is purchased but not put to use in the previous year then whether for the purpose of calculating WDV u/s 43(6), the actual cost of such unused asset shall be included or not?

[Ganeshan Kalyani]

Before going to the section referred by you, i would like to ask that if the asset purchased but not put to use, will it value depreciate. Only when it has been put to use it value would come done and to make provision the depreciation is provided for. Hence in my view WDV of unused asset will not form part of asset to arrive at depreciation.

AI Summary

WDV inclusion for unused assets: practitioner view that cost of unused asset should not be included for depreciation calculations. The central issue is whether the cost of an asset purchased but not put to use is includible in the written down value (WDV) under section 43(6) for computing depreciation. The respondent's view is that depreciation accrues only when an asset is put to use, and therefore the WDV of an unused asset should not be included in the block of assets for arriving at depreciation for the year.