TaxTMI 
TaxTMI 
13 Oct 2026 
Capital cost of animals is not allowed during productive life. Terminal deduction is allowed. Real income is not computed during and after productive life of animals real need to allow depreciation
Deductions for animals capital cost is not allowed during productive life both under ITA 2025 and in ITA 1961. Terminal deduction is allowed. Real income is not computed both during and after productive life of animals- need for reconsideration to allow depreciation.
Abbreviations used:
ITA 1961 or 61 Act - The income-tax Act, 1961 (including earlier enactments also)
ITA 2025 or 25 Act - The income-tax Act,2025
ITR 1962 or 62 Rules - Income Tax Rules 1962 (including earlier Rules also)
ITR 2026 Or Rules 2026- Income-tax rules 2026
PY - Previous year in ITA 1961
AY- Assessment year in ITA 1961.
TY - Tax year in ITA 2025
| Remarks | ||
| 32. Other deductions. | Other deductions. | Similar |
| The following amounts shall be allowed as deduction in computing income chargeable under section 26:--
| 36. (1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28-
| Similar except changed style, and changed sections. |
| (j) the amount being difference between the actual cost of animals used for the purposes of the business or profession otherwise than as stock-in-trade and the amount realised from the carcasses or animals, where such animals have died or become permanently useless; and | (vi) in respect of animals which have been used for the purposes of the business or profession otherwise than as stock-in-trade and have died or become permanently useless for such purposes, the difference between the actual cost to the assessee of the animals and the amount, if any, realised in respect of the carcasses or animals; | Both are similar and to the same effect. It is in nature of terminal depreciation allowance which is allowed with reference to actual cost because depreciation is not allowed during productive life of animals. On death actual cost minus amount realised, if any, in respect of carcasses is allowed. In case of sale of animal it should be when it has become permanently useless. |
Very old mind set is reflected in ITA 2025 ignoring concept of real income, changed times of capital intensive animal-based businesses.
For computing real income depreciation need to be allowed during productive life of animals.
As per law prevailing today, any part of capital costs of animal is not allowed during period when animal is used to earn income in business. So real income is not computed during productive period.
After productive period on discarding and selling unproductive animal an allowance like obsolescence allowance is allowed. If animal dies excess of actual cost of animal above value realised, if any, on sale of its carcass is allowed. Bothe these can be significant amount of loss, and this is when productive life has ended and revenue is stopped. So at this stage also real income is not computed.
Considering uncertain time of death of animals (not uncertain life- normal life is reasonably estimated) concept of block of assets is best suited for providing for depreciation allowance in businesses wherein animals are used as important apparatus having long useful life, and possibility of restarting useful life after a rejuvenation period and over all long span of productive period over more than one year.
An animal's commercial life spans differs from animal to animal from the time it reaches maturity (working/productive age) and continue so until it advances to natural decline, where it can no longer be sustained profitably due to reduced productivity in terms of out put of products and or services availed from animals.
Animals maturity and working life is different from animal to animal. Furthermore, it can vary on many variables like upbringing phase during which how animal is fed, and tuned, taken care for growth, health maintenance which can give another productive period after rejuvenation.
During productive life also how care is taken about health of animal by proper feeding, living conditions, proper workouts of animals by outing in fields, health care normally and during sickness etc.
Another aspect is that how many matured animal are acquired to avail products immediately and how many are born at farms and grown on farm to achieve maturity and productive life cycle.
Capital costs of animals have also increased substantially and now any animal based business is highly capital intensive. Cost of animals is a major part. When other costs of capital nature are amortized or depreciated, there is no reason for not allowing depreciation during productive periods of animals.
The subject matter is very vast and local conditions also apply in ascertaining or estimating several factors related to animal based business. In the following paragraph an attempt has been made to discuss some of aspects.
Examples, of reasonable commercial lifespan estimates factoring in their growth phase and full productive years before senior age of some of animals are given below:
1. Agriculture & Dairy Livestock
| Animal | Natural Lifespan | Age at Maturity | Reasonable Commercial Lifespan | Commercial Reality & Context |
| Dairy Cow | 20-25 years | ~2 years | 8-10 years | After a 2-year growth phase, they can successfully undergo 6 to 8 lactations (calving cycles) before joint or fertility issues emerge. |
| Buffalo | 18-25 years | ~3 years | 12-14 years | Hardier than cows. They take longer to mature but offer 9 to 11 years of high-fat milk production. |
| Breeding Goat / Sheep | 10-15 years | ~1 year | 6-8 years | They start breeding at 12 months and can reliably produce offspring, milk, or wool for 5 to 7 consecutive years. |
| Beef Cattle (Breeding Stock) | 20-25 years | ~2 years | 10-12 years | While market calves are sold early, the breeding herd (cows kept to produce calves) remains commercially viable for over a decade. |
2. Poultry & Swine (Breeding & Extended Production)
| Animal | Natural Lifespan | Age at Maturity | Reasonable Commercial Lifespan | Commercial Reality & Context |
| Layer Chicken (Breeding/Barn) | 5-10 years | ~5 months | 3-4 years | Industrial cage setups discard hens at 2 years, but in free-range, organic, or parent-stock breeding operations, they remain commercially viable for 3 to 4 years. |
| Breeding Sow (Female Pig) | 10-15 years | ~8-10 months | 5-7 years | Once mature, a sow can reliably produce 10 to 12 large litters of piglets over a 5-year span before maternal instincts or teat health declines. |
| Breeding Boar (Male Pig) | 10-15 years | ~9 months | 4-6 years | Kept for artificial insemination or natural breeding, maintaining high fertility for several years. |
Transport, Draft & Tourism Career Lifecycles
| Animal | Natural Lifespan | Age Stages & Alternative Commercial Usages | Total Commercial Lifespan |
| Horse | 25-30 years | Ages 0-3: Growth & light ground training (Investment phase)Ages 4-12: Peak performance (High-end tourism, competitive racing, heavy riding)Ages 13-18: Moderate capacity (Carriage/taiga pulling, beginner riding lessons)Ages 19-22: Senior roles (Therapy horse, companion animal, light trail walking) | 18-22 years |
| Camel | 40-50 years | Ages 0-4: Growth & socialization (Investment phase)Ages 5-15: Peak strength (Heavy freight transport, long-distance desert safaris)Ages 16-25: Moderate capacity (Short-distance dune rides for tourists, local farming)Ages 26-35: Late-stage usage (Light agricultural work, oil mills, breeding stock) | 30-35 years |
| Donkey / Mule | 25-35 years | Ages 0-2: Growth & basic packing training (Investment phase)Ages 3-12: Peak endurance (Heavy industrial hauling, brick-kilns, mountain trekking)Ages 13-20: Moderate capacity (Light farm work, local produce transport)Ages 21-25: Senior roles (Livestock guarding, orchard weeding, companion animal) | 20-25 years |
| Elephant | 60-70 years | Ages 0-14: Growth & intensive mahout training (Investment phase)Ages 15-35: Peak capacity (Heavy logging, timber hauling, intensive multi-day safaris)Ages 36-50: Transition phase (Religious festivals, temple processions, light resort tourism)Ages 51-60: Senior roles (Eco-tourism greeting, sanctuary educational displays) | 45-5 |
Commercial Lifecycles of Milk Producing Animals
| Animal | Age Stages & Alternative Commercial Usages | Total Commercial Lifespan |
| Dairy Cow | Ages 0-2 (Investment Phase): Zero milk production. The heifer is grown, vaccinated, and bred for the first time. High feed costs with no immediate return.Ages 2-6 (Peak Production - The Golden Years): Begins after the first calving. The 3rd to 5th lactations yield the maximum volume of milk, driving the farm's primary revenue.Ages 7-9 (Declining Milk / Breeding Phase): Milk volume drops by 15-20%. The strategy shifts to using her strong genetics to breed high-quality replacement heifers while selling a moderate volume of milk. Ages 10+ (Senior Phase): High-volume commercial milking becomes unprofitable. Cows are often sold to smaller, low-overhead local farms at a lower cost, or kept purely for organic compost (manure/urine) production. | 8-10 years |
| Dairy Buffalo | Ages 0-3 (Slow Maturity Phase): Buffaloes mature slower than cows. This is a longer investment phase requiring 3 years of rearing before the first milk output. Ages 3-8 (Peak Fat & Premium Phase): Post-first calving. Buffalo milk is highly profitable during this stage due to its high fat and solid-not-fat (SNF) content, sold at a premium to cheese and sweet manufacturers. Ages 9-13 (Steady Production Phase): Buffaloes possess superior disease resistance compared to cows. Even as volume slightly dips, their high fat-percentage remains stable, keeping them commercially viable longer.Ages 14+ (Alternative / Domestic Phase): Removed from intensive commercial herds. They are transitioned to low-cost maintenance setups for small-scale breeding or household milk supply. | 12-14 years |
| Dairy Goat | Ages 0-1 (Rapid Growth Phase): Extremely fast turnaround. Goats reach maturity and can experience their first kidding (giving birth) by 10-12 months. Ages 1-4 (High-Value Premium Phase): Peak milk production. Goat milk is often marketed at a high premium for its medicinal, hypoallergenic, and easy-to-digest properties.Ages 5-7 (Meat & Herd Replacement Phase): Milk yields decline, but older does frequently give birth to twins or triplets. The business model shifts from dairy to selling offspring into the livestock/meat market. | 6-8 years |
Key Business Strategies for Managing Declining Capacity
- The Dual-Asset Strategy (Calving vs. Milking):
A dairy animal's value is split between the milk she yields and the calves she produces. If an 8-year-old cow's milk production drops but she continues to give birth to a healthy calf every year, she remains a commercial asset because she provides the farm with a free replacement animal. - Feed Stratification (Nutrient vs. Cost Control):
To maximize profit margins, animals in their peak phase are fed expensive, high-nutrient Total Mixed Rations (TMR). As they transition into declining phases, they are moved to cheaper, forage-heavy diets to drastically lower the farm's daily operational expenses. - Strategic Culling & Cascading Markets:
Large-scale commercial operations require extreme efficiency (e.g., minimum 25 liters/day per cow). Once an animal drops below this threshold, she is culled from the main herd and sold to mid-tier or smallholder farmers. For a small farmer with minimal overhead, a cow producing 12-15 liters is still highly profitable.
Entertainment and Tourism
Tourism and Rides: Equestrian ranches, camel treks, and wildlife-focused eco-tourism build local economies.
Sport and Racing: Horse racing, polo, and dog sledding represent multi-billion-dollar commercial sports industries.
Media and Exhibition: Zoos, aquariums, circus, and the film/advertising industry employ trained animals for public viewing and media production.
Science, Research, and Medicine
- Testing and Trials: Pharmaceuticals, cosmetics, and medical research facilities use animal models to test safety and efficacy, though strict ethical guidelines and alternative methods are increasingly mandated.
- Diagnostics and Detection: Specially trained dogs are used in healthcare settings or agriculture to detect diseases or pests.
- The Pet and Companion Economy
- Pet Care Industry: Veterinary medicine, pet food manufacturing, grooming, pet insurance, and specialized boarding form a massive consumer market.
- Workplace Companions: Office dogs and therapy animals are increasingly integrated into corporate spaces to reduce employee stress, boost morale, and aid recruitment.
There are many other business usages of animals and services related to animals. These are growing as well. Above are only illustrative.