TaxTMI 
TaxTMI 
Depreciation for undertaking engaged in generation or generation and distribution of power under ITA 61 and ITA 25 - some suggestions for simplicity and flexibility.
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....<br> Article By: - DEV KUMAR KOTHARI Dated:- 19-9-2026<br> Got 1 Replies <br> Income Tax<br> <br> Abbreviation used : PU - for undertaking engaged in generation or generation and distribution of power. ITA 1961 or 61 Act - The income-tax Act, 1961 ITA 2025 or 25 Act - The income-tax Act, 2025 ITR 1962 or 62 Rules - Income Tax Rules 1962 ITR 2026 Or Rules 2026- Income-tax rules 2026 Concept of block of assets is not applicable for PU Depreciation is allowed on actual cost in respect of each plant and asset separately, without concept of block of asset. Though one can club all assets falling under same description and rate of depreciation, however, due to special provision for terminal depreciation actual cost, depreciation actually allowed ....
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....and WDV of each asset need to be computed. In case of sale etc. of any asset, a terminal depreciation, if any, will be allowed separately and simple treatment in case of block of assets on which depreciation on WDV basis is allowed, is not applicable in case of PU. Deduction for depreciation in case of PU Section 33 - relevant portion applicable in case of PU XXXX ITA 2025 S.33 ITA 1961 S.32 Remarks 33. Deduction for depreciation. (1) A deduction in respect of depreciation of- Depreciation. 32. (1) 1[In respect of depreciation of- Provisions are similar in drafting, impact and application. (a) buildings, machinery, plant or furniture, being tangible assets; (b) know-how, patents, copyrights, trademarks, licences, franchises or any....
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.... other business or commercial rights of similar nature, being intangible assets acquired on or after the 1st April, 1998, not being goodwill of a business or profession, (i) buildings, machinery, plant or furniture, being tangible assets; (ii) know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets acquired on or after the 1st day of April, 1998, [not being goodwill of a business or profession,] Provisions are similar in drafting, impact and application. owned wholly or partly by the assessee and used wholly and exclusively for the purposes of the business or profession, shall be allowed, as per the provisions of this section. owned, wholly o....
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....r partly, by the assessee and used for the purposes of the business or profession, the following deductions shall be allowed-] Provisions are similar in drafting, impact and application. (2) In case of assets referred to in sub-section (1) of an undertaking engaged in generation or generation and distribution of power, the deduction in respect of depreciation shall be such percentage of its actual cost to the assessee, as may be prescribed. (i) in the case of assets of an undertaking engaged in generation or generation and distribution of power, such percentage on the actual cost thereof to the assessee as may be prescribed;] Provisions are similar in drafting (except change in clause number,) impact and application. (10) The differenc....
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....e between the written down value and the moneys payable including the scrap value, if any, for any tangible asset in respect of which depreciation is claimed and allowed under sub-section (2), shall be allowed as deduction when- 19[(iii) in the case of any building, machinery, plant or furniture in respect of which depreciation is claimed and allowed under clause (i) and Provisions are similar in drafting, (except changes in clause number and words used ) impact and application. (a) such asset is sold, discarded, demolished or destroyed in the tax year not being the tax year in which it is first put into use; (b) the moneys payable including the scrap value, if any, is less than its written down value; and which is sold, discarded, dem....
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....olished or destroyed in the previous year (other than the previous year in which it is first brought into use), the amount by which the moneys payable in respect of such building, machinery, plant or furniture, together with the amount of scrap value, if any, fall short of the written down value thereof : Provisions are similar in drafting, (except changes in clause number and words used ) impact and application. (c) such deficiency is actually written off in the books of account of the assessee. Provided that such deficiency is actually written off in the books of the assessee. Explanation.-For the purposes of this clause,- (1) "moneys payable" in respect of any building, machinery, plant or fur....
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....niture includes- (a) any insurance, salvage or compensation moneys payable in respect thereof; (b) where the building, machinery, plant or furniture is sold, the price for which it is sold, Concept of Block of asset can be extended to depreciable assets of PU and provision of terminal depreciation can be omitted. Definition for block of assets of PU, cost of such block of assets of PU, and written down value of block of such assets of PU can be inserted. This will introduce simplicity and easy recording in case of PU, as in case of other assesses in whose case depreciation is allowed on written down value on basis of block of assets. Option to PU to adopt Cost basis and WDV basis can be introduced to provide flexibility to PU. Req....
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....uest to learned readers: Learned editors team, readers and authors of this website are requested to send their views and feedback and also to point out some points which might have missed by the author, due to reason of drafting styles adopted in the ITA25 whereby there can be some provisions placed elsewhere in ITA 25 and which might have been missed by the author. --Reply By: DEV KUMAR KOTHARI The Reply: While writing the article, author felt some thing missing, hence requested learned readers to share feed back. On review of article and various linked provisions author found that Rule 25 vide sub rule (5) and (6) provide an option for PU to adopt WDV method. The said sub-rule reads as follows: "5) The undertaking specified in section ....
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....33(2) may, at its option, be allowed depreciation under sub-rule (1) read with Appendix I instead of the depreciation specified in Appendix II, if option is exercised on or before the due date for furnishing the return of income under section 263(1)(c) for the tax year in which it begins to generate power. (6) Any option under sub-rule (5) once exercised, shall be final and shall apply to all the subsequent tax years." This is similar to option found in ITR1961. Question which arises is whether this option provided in Rules is valid? because in the ITA 2025 there seems no provision for such an option. Whether option provided vide Rule 25(5) is inconsistent with provisions of ITA 2025 In ITA 1961 and ITR 1962 also the same lacking was notice....
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....d. ....