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A Guide to Depreciation Rates as per Income Tax for AY 2020-21

a-guide-to-depreciation-rates-as-per-income-tax-for-ay-2020-21

Depreciation Rates as per Income Tax for FY 2019-20 (AY 2020-21): Depreciation is an allowance which is allowed as a deduction while computing the business income of an assessee. In the computation, the depreciation as per Income Tax Act, 1961 is allowed while the book depreciation is disallowed. This is because the Income Tax Act prescribes its own rate of depreciation. Chart of Depreciation as per Income Tax for AY 2020-21 is given at the end.


    What is Depreciation as per Income Tax


    Depreciation is an accounting term which is also recognized in the Income Tax Act. The term depreciation is defined as a reduction in the value of an asset over time, due in particular to wear and tear in respect of fixed assets.

    When a business enterprise prepares its profit and loss account, it charges depreciation. Since depreciation is an estimated charge, the rate of depreciation is prescribed in the Companies Act and the Income Tax Act. Hence these two laws provide for rate of depreciation to be allowed as a charge against the profits of the enterprise.

    In case of a company, the depreciation charge is as per Companies Act whereas in computing the income under the Income Tax Act the depreciation as per Income Tax Act is allowed. Normally, the depreciation as per Income Tax Act is higher than the Companies Act.

    This article discusses the Depreciation as per Income Tax Act only.

    What are the relevant provisions of the Income Tax Act related to Depreciation


    The following provisions of the Income Tax Act, 1961 overall governs the allowance of ‘depreciation’ as per Income Tax:

    (i) Section 2(11): which defines the ‘Block of assets’
    (ii) Section 32: Which deals with depreciation allowance
    (iii) Section 32(1)(iia): Which deals with additional depreciation is certain cases
    (iv) Section 43(1): Defines the Actual Cost of an asset
    (v) Section 43(6): Related to Computation of Written Down Value
    (vi) Section 50: relates to the computation of deemed capital gains on transfer of depreciable assets
    (vii) Rule 5 of Income Tax Rules, 1962 read with Appendix-1

    How depreciation as per Income Tax is calculated


    The Income Tax Act allows depreciation on the Written Down Value of the assets. The depreciation is computed on ‘Block of assets’ at the rates prescribed rates provided in Appendix-1 of the Income Tax Rules, 1962.

    The Income Tax Act prescribes Written Down Value method of depreciation except for certain cases where depreciation can be claimed on the SLM (Straight Line Method).

    Prior to 1998, depreciation as per Income Tax was allowed only on tangible assets viz., Building, Plant, Machinery, Furniture, etc. From FY 198-99, some intangible assets like goodwill, patents, copyright, etc. were included in the list of eligible assets for claiming depreciation allowance.

    Depreciation as per Income Tax is based on ‘Block of Assets’ concept. The term ‘block of assets’ is defined in section 2(11) of the Act to mean “a group of assets falling within a class of assets comprising—

    (a) tangible assets, being buildings, machinery, plant or furniture ;

    (b) intangible assets, being know-how, patents, copyrights, trade-marks, licences, franchises or any other business or commercial rights of similar nature,

    in respect of which the same percentage of depreciation is prescribed.

    Thus any individual asset which falls within a block loses its identity and after it is absorbed in the block, it forms a part of that block of assets to which it belongs. The individual asset becomes an inseparable part of the block.

    After the amendment in section 32 w.e.f. 1st April 1988, an individual asset loses its identity and for allowing depreciation the entire block has to be considered. Further,  there is no requirement that each and every item in the said block should actually be used so as to entitle the assessee to claim depreciation thereupon. So the block becomes a single unit on which depreciation is claimed under the Income Tax Act.


    Decided cases:

    1. India Medtronic (P.) Ltd. v. DCIT (ITA No.7555/Mum/2012) ITAT Mumbai Bench decided on 04.05.2018

    2. Gulati Saree Centre vs ACIT ( 240 ITR 94) ITAT Chandigarh decided on 09.08.1999

    3. M/s Swati Synthetics Ltd vs ITO (ITA No. 1165/M/2006) ITAT Mumbai Bench decided on 07.12.2009

    4. Natco Exports vs DCIT (2003) 86 ITD 445 ITAT Hyderabad

    5. CIT Vs. Bharat Aluminium Co. Ltd. (ITA Nos. 532, 1484, 1486, 1487, 1592, 1593, 1670 and 1671 of 2006) Delhi High Court decided on 15.10.2009

    6. ACIT Vs M/s Krystal Colloids Pvt. Ltd. (ITA No. 3170/MUM/2016) ITAT Mumbai Bench decided on 31.07.2008

    7. Ashok Pan Products (P) Ltd. vs ACIT (ITA No. 137/Lkw/11) ITAT Lucknow 


    For computing the depreciation, the first step is to determine the actual cost of the capital asset. It comprises the purchase price of the asset, any direct expenses attributable to the acquisition of the asset, etc. as per accounting principles. Any subsidy or other monetary benefits received from the government etc. is reduced from the purchase cost to determine the ‘actual cost’ of the asset. 

    According to section 43(1), actual cost” means  the actual cost of the assets to the assessee, reduced by that portion of the cost thereof, if any, as has been met directly or indirectly by any other person or authority.


    Important points to be kept in mind for Actual Cost

    1. Interest paid or payable on money borrowed for acquiring a capital asset shall be required to be added to the actual cost till the asset is put to use. After the asset is put to use, such interest can be claimed as revenue expenditure. [Section 36(1)(iii)]

    2. When an asset is purchased on instalment, the interest payable on the instalments after the asset is put to use cannot be included in the actual cost of the asset. [CIT vs Anang Polyfil Pvt. Ltd. (267 ITR 266) Gujarat High Court decided on 12.02.2004]

    3. Any income earned on money deposited to open a letter of credit for the purchase of the machinery is incidental to the acquisition of assets and hence the same will reduce the actual cost of the asset. [CIT vs Karnal Co-Operative Sugar Mills Ltd. (2000) 243 ITR 2 (SC) decided on 23.04.1999]

    No Depreciation as per Income Tax is allowed if an asset is acquired in Cash 


    The second proviso to section 43(1) provides that if the assessee incurs any expenditure for acquisition of any asset or part thereof in respect of which a payment or aggregate of payments made to a person in a day, by cash, exceeds Rs. 10,000, such expenditure shall be ignored for the purposes of determination of actual cost.

    In other words, if any asset is acquired and the same is paid in cash of more than Rs. 10,000 in a day then such cost will not form the actual cost of the asset and hence depreciation cannot be claimed on the part of the asset which is paid in cash.

    For example, if the price of an asset is Rs. 1,00,000 and if the assessee has paid Rs. 80,000 by cheque and Rs. 20,000 in cash then depreciation will be allowed on Rs. 80,000 only under the Income Tax Act.

    In this respect, it is important to note that payment up to Rs. 10,000 in a single day is allowed. Hence in the given example, the assessee can pay Rs. 10,000 per day for 10 days and is eligible to claim depreciation as per Income Tax on the actual cost of Rs. 1,00,000.

    Meaning of Written Down Value (WDV)


    According to section 32(1)(ii), depreciation shall be allowed in the case of any block of assets, at the prescribed rate of depreciation on the written down value thereof.

    According to section 43(6), "written down value" means—
    (a) in the case of assets acquired in the previous year, the actual cost to the assessee;
    (b) in the case of assets acquired before the previous year, the actual cost to the assessee less all depreciation actually allowed to him under the Income Tax Act, 1961.

    Where any asset from any block of assets is sold or discarded or demolished or destroyed during a previous year, then any amount of money payable including scrap value shall be reduced from the block of assets.

    If the sales consideration so received or receivable is less than the block of assets then the resultant figure shall be the written down value of that block of assets for the purpose of charging current year depreciation. [Section 43(6)(c)(B)]

    If the sum so received or receivable exceeds the block of assets, then the surplus results in gain which is chargeable to tax as short term capital gain under section  50.


    The term ‘money payable’, as per the Explanation below section 41(4), 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.

    The term "sold" includes a transfer by way of exchange.


    To sum up, the following table illustrates the computation of the Written Down Value of a block of assets-
    Particulars
    Amount
    (in Rs.)
    (a)Opening WDV as on 01.04.20xx
    xxxx
    (b) Add: Additions during the Year
    At Actual Cost of the asset
    xxxx
    (c) Gross Block [(a)+(b)]
    xxxx
    (d) Less: Money Payable including scrap value on assets sold or transferred during the year
    (-)xxxx
    (e) Net Block or Written Down Value (WDV) as on 31.03.20xx [(c)-(d)]
    xxxx
    If (e) results in negative, then WDV shall become Nil and the resultant surplus is chargeable as “Short Term Capital Gains” u/s 50

    What are the conditions to be satisfied for claiming depreciation under Income Tax Act


    The following conditions must be satisfied to claim depreciation under the Income Tax-

    1. The asset must be owned by the assessee. The asset may be owned wholly or partially

    If the assessee is not the owner of the asset, he is not entitled for the depreciation. [Golcha Properties (Pvt.) Ltd. vs. CIT  (1994) 209 ITR 80 (Raj. HC)]

    It is not important to have the legal title to claim the ownership of the asset. If money is paid and the asset is used by the assessee in his business, then only because the asset or property is not registered in the name of the assessee does not deprive him from depreciation claim. [Mysore Minerals v. CIT (1999) 239 ITR 775 (SC)

    2. The asset must be used for the purpose of business or profession of the assessee.

    3. The asset must be put to use for the purpose of business or profession of the assessee.

    One important point to note here is that if the asset is put to use for less than 180 days during the previous year, then depreciation claim shall be restricted to 50 per cent of the normal depreciation. Full depreciation as per the prescribed rate is allowed if the asset is put to use for 180 days or more during the previous year. This restriction applies for the first year of acquisition and not in the subsequent years.

    4. The depreciation is allowed only for the following specified tangible and intangible assets-
    (i) buildings, machinery, plant or furniture, being tangible assets;
    (ii) know-how, patents, copyrights, trademarks, 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.

    Provisions regarding Carry forward and set off of unabsorbed depreciation


    According to section 32(2), Where, in the assessment of the assessee, full effect cannot be given to any allowance under sub-section (1) in any previous year, owing to there being no profits or gains chargeable for that previous year, or owing to the profits or gains chargeable being less than the allowance, then, subject to the provisions of sub-section (2) of section 72 and sub-section (3) of section 73, the allowance or the part of the allowance to which effect has not been given, as the case may be, shall be added to the amount of the allowance for depreciation for the following previous year and deemed to be part of that allowance, or if there is no such allowance for that previous year, be deemed to be the allowance for that previous year, and so on for the succeeding previous years.

    If in any previous year there is no profit or profits are not sufficient to give full effect of current year depreciation, then the depreciation which cannot be set-off against current year’s profit (unabsorbed depreciation) is carried forward to the following year and is added to the depreciation allowance for the next year. Hence, the unabsorbed depreciation of preceding year becomes the depreciation allowance of the current year.

    In respect of carry forward and set-off of unabsorbed depreciation, the following provisions are noteworthy-

    1. Unabsorbed depreciation can be carried forward for an indefinite period. There is no limit on the number of years for which it can be carried forward and set-off.

    2. Brought forward Unabsorbed depreciation can be set-off with any heads of income except Income from Salaries.

    3. The order of set-off is given below-
    (1) Current Year Depreciation
    (2) Brought-forward business loss
    (3) Unabsorbed Depreciation

    What are the prescribed Rates of Depreciation as Per Income Tax Act,1961 for FY 2019-20 (AY 2020-21)


    Rule 5 of Income Tax Rules, 1962 read with Appendix-1

    Rates of depreciation for Income Tax

    as applicable for the assessment year 2020-21
    Block of assets
    Depreciation allowance as a percentage of written down value
    PART A
    TANGIBLE ASSETS
    I. BUILDING [See Notes 1 to 4 below the Table]
    (1) Buildings which are used mainly for residential purposes except hotels and boarding houses
    5
    (2)  Buildings other than those used mainly for residential purposes and not covered by sub-items (1) above and (3) below
    10
    (3)  Buildings acquired on or after the 1st day of September, 2002 for installing machinery and plant forming part of water supply project or water treatment system and which is put to use for the purpose of business of providing infra- structure facilities under clause (i) of sub-section (4) of section 80-IA
    40
    (4)  Purely temporary erections such as wooden structures
    40
    II. FURNITURE AND FITTINGS
    Furniture and fittings including electrical fittings [See Note 5 below the Table]
    10
    III. MACHINERY AND PLANT
    (1)   Machinery and plant other than those covered by sub-items (2), (3) and (8) below : [See Note 5A below the Table]
    15
    (2)   (i) Motor cars, other than those used in a business of running them on hire, acquired or put to use on or after the 1st day of April, 1990 except those covered under entry (ii);
    15
       (ii) Motor cars, other than those used in a business of running them on hire, acquired on or after the 23rd day of August, 2019 but before the 1st day of April, 2020 and is put to use before the 1st day of April, 2020.
    30
    (3)  (i) Aeroplanes - Aeroengines
    40
    (ii)  (a) Motor buses, motor lorries and motor taxis used in a business of running them on hire other than those covered under entry (b).
    30
      (b) Motor buses, motor lorries and motor taxis used in a business of running them on hire, acquired on or after the 23rd day of August, 2019 but before the 1st day of April, 2020 and is put to use before the 1st day of April, 2020.
    45
     (iii) Commercial vehicle which is acquired by the assessee on or after the 1st day of October, 1998, but before the 1st day of April, 1999 and is put to use for any period before the 1st day of April, 1999 for the purposes of business or profession in accordance with the third proviso to clause (ii) of sub-section (1) of section 32 [See Note 6 below the Table]
    40
    (iv)  New commercial vehicle which is acquired on or after the 1st day of October, 1998, but before the 1st day of April, 1999 in replacement of condemned vehicle of over 15 years of age and is put to use for any period before the 1st day of April, 1999 for the purposes of business or profession in accordance with the third proviso to clause (ii) of sub-section (1) of section 32 [See Note 6 below the Table]
    40
    (v)  New commercial vehicle which is acquired on or after the 1st day of April, 1999 but before the 1st day of April, 2000 in replacement of condemned vehicle of over 15 years of age and is put to use before the 1st day of April, 2000 for the purposes of business or profession in accordance with the second proviso to clause (ii) of sub-section (1) of section 32 [See Note 6 below the Table]
    40
    (vi)  New commercial vehicle which is acquired on or after the 1st day of April, 2001 but before the 1st day of April, 2002 and is put to use before the 1st day of April, 2002 for the purposes of business or profession [See Note 6 below the Table]
    40
    (via) New commercial vehicle which is acquired on or after the 1st day of January, 2009 but before the 1st day of October, 2009 and is put to use before the 1st day of October, 2009 for the purposes of business or profession [See paragraph 6 of the Notes below this Table]
    40
     (vii)  Moulds used in rubber and plastic goods factories
    30
    (viii)  Air pollution control equipment, being—
    40

    (a)  Electrostatic precipitation systems
    (b)  Felt-filter systems
    (c)  Dust collector systems
    (d)  Scrubber-counter current/venturi/packed bed/cyclonic scrubbers
    (e)  Ash handling system and evacuation system
    (ix)  Water pollution control equipment, being—
    40
    (a)  Mechanical screen systems
    (b)  Aerated detritus chambers (including air compressor)
    (c)  Mechanically skimmed oil and grease removal systems
    (d)  Chemical feed systems and flash mixing equipment
    (e)  Mechanical flocculators and mechanical reactors
    (f)  Diffused air/mechanically aerated activated sludge systems
    (g)  Aerated lagoon systems
    (h)  Biofilters
    (i)  Methane-recovery anaerobic digester systems
    (j)  Air floatation systems
    (k)  Air/steam stripping systems
    (l)  Urea Hydrolysis systems
    (m)  Marine outfall systems
    (n)  Centrifuge for dewatering sludge
    (o)  Rotating biological contractor or bio-disc
    (p)  Ion exchange resin column
    (q)  Activated carbon column
     (x) (a) Solidwaste control equipments being - caustic/lime/chrome/mineral/cryolite recovery systems
    40
    (b)  Solidwaste recycling and resource recovery systems
    (xi)  Machinery and plant, used in semi-conductor industry covering all integrated circuits (ICs) (excluding hybrid integrated circuits) ranging from small scale integration (SSI) to large scale integration/very large scale integration (LSI/VLSI) as also discrete semi-conductor devices such as diodes, transistors, thyristors, triacs, etc., other than those covered by entries (viii), (ix) and (x) of this sub-item and sub-item (8) below
    30
    (xia) Life saving medical equipment, being—










    40




    (a)  D.C. Defibrillators for internal use and pace makers
    (b)  Haemodialysors
    (c)  Heart lung machine
    (d)  Cobalt Therapy Unit
    (e)  Colour Doppler
    (f)  SPECT Gamma Camera
    (g)  Vascular Angiography System including Digital subtraction Angiography
    (h)  Ventilator used with anaesthesia apparatus
    (i)  Magnetic Resonance Imaging System
    (j)  Surgical Laser [See Note 5B]
    (k)  Ventilators other than those used with anaesthesia
    (l)  Gamma knife
    (m)  Bone Marrow Transplant Equipment including silastic long standing intravenous catheters for chemotherapy
    (n)  Fibreoptic endoscopes including Paediatric resectoscope/audit resectoscope, Peritoneoscopes, Arthoscope, Microlaryngoscope, Fibreoptic Flexible Nasal Pharyngo Bronchoscope, Fibreoptic Flexible Laryngo Bronchoscope, Video Laryngo Bronchoscope and Video Oesophago Gastroscope, Stroboscope, Fibreoptic Flexible Oesophago Gastroscope
    (o)  Laparoscope (single incision)
    (4)  Containers made of glass or plastic used as re-fills
    40
    (5)  Computers including computer software [See note 7 below the Table]
    40
    (6)  Machinery and plant, used in weaving, processing and garment sector of textile industry, which is purchased under TUFS on or after the 1st day of April, 2001 but before the 1st day of April, 2004 and is put to use before the 1st day of April, 2004 [See Note 8 below the Table]
    40
    (7)  Machinery and plant, acquired and installed on or after the 1st day of September, 2002 in a water supply project or a water treatment system and which is put to use for the purpose of business of providing infrastructure facility under clause (i) of sub-section (4) of section 80-IA [See Notes 4 and 9 below the Table]
    40
    (8)  (i) Wooden parts used in artificial silk manufacturing machinery
    40
    (ii)  Cinematograph films - bulbs of studio lights
    40
    (iii)  Match factories - Wooden match frames
    40
    (iv)  Mines and quarries :
    (a)  Tubs, winding ropes, haulage ropes and sand stowing pipes
    40
    (b)  Safety lamps
    (v)  Salt works - Salt pans, reservoirs and condensers, etc., made of earthy, sandy or clayey material or any other similar material
    40
    (vi)  Flour mills - Rollers
    40
    (vii)  Iron and steel industry - Rolling mill rolls
    40
    (viii)  Sugar works - Rollers
    40
    (ix)  Energy saving devices, being—
    A. Specialised boilers and furnaces:




    40
    (a)  Ignifluid/fluidized bed boilers
    (b)  Flameless furnaces and continuous pusher type furnaces
    (c)  Fluidized bed type heat treatment furnaces
    (d)  High efficiency boilers (thermal efficiency higher than 75 per cent in case of coal fired and 80 per cent in case of oil/gas fired boilers)
    B. Instrumentation and monitoring system for monitoring energy flows:








    40



    (a)  Automatic electrical load monitoring systems
    (b)  Digital heat loss meters
    (c)  Micro-processor based control systems
    (d)  Infra-red thermography
    (e)  Meters for measuring heat losses, furnace oil flow, steam flow, electric energy and power factor meters
    (f)  Maximum demand indicator and clamp on power meters
    (g)  Exhaust gases analyser
    (h)  Fuel oil pump test bench
    C. Waste heat recovery equipment:


    40

    (a)  Economisers and feed water heaters
    (b)  Recuperators and air pre-heaters
    (c)  Heat pumps
    (d)  Thermal energy wheel for high and low temperature waste heat recovery
    D. Co-generation systems:



    40


    (a)  Back pressure pass out, controlled extraction, extraction-cum-condensing turbines for co-generation along with pressure boilers
    (b)  Vapour absorption refrigeration systems
    (c)  Organic rankine cycle power systems
    (d)  Low inlet pressure small steam turbines
    E. Electrical equipment:










    40



    (a)  Shunt capacitors and synchronous condenser systems
    (b)  Automatic power cut off devices (relays) mounted on individual motors
    (c)  Automatic voltage controller
    (d)  Power factor controller for AC motors
    (e)  Solid state devices for controlling motor speeds
    (f)  Thermally energy-efficient stenters (which require 800 or less kilocalories of heat to evaporate one kilogram of water)
    (g)  Series compensation equipment
    (h)  Flexible AC Transmission (FACT) devices - Thyristor controlled series compensation equipment
    (i)  Time of Day (ToD) energy meters
    (j)  Equipment to establish transmission highways for National Power Grid to facilitate transfer of surplus power of one region to the deficient region
    (k)  Remote terminal units/intelligent electronic devices, computer hardware/software, router/bridges, other required equipment and associated communication systems for supervisory control and data acquisition systems, energy management systems and distribution management systems for power transmission systems
    (l)  Special energy meters for Availability Based Tariff (ABT)
    F. Burners:


    40
    (a)  0 to 10 per cent excess air burners
    (b)  Emulsion burners
    (c)  Burners using air with high pre-heat temperature (above 300°C)
    G. Other equipment:




    40



    (a)  Wet air oxidation equipment for recovery of chemicals and heat
    (b)  Mechanical vapour recompressors
    (c)  Thin film evaporators
    (d)  Automatic micro-processor based load demand controllers
    (e)  Coal based producer gas plants
    (f)  Fluid drives and fluid couplings
    (g)  Turbo charges/super-charges
    (h)  Sealed radiation sources for radiation processing plants
    (x) Gas cylinders including valves and regulators
    40
    (xi)  Glass manufacturing concerns - Direct fire glass melting furnaces
    40
    (xii) Mineral oil concerns:
    (a)  Plant used in field operations (above ground) distribution - Returnable packages

    40
    (b)  Plant used in field operations (below ground), but not including kerbside pumps including underground tanks and fittings used in field operations (distribution) by mineral oil concerns
    (c)  Oil wells not covered in clauses (a) and (b) (with effect from the assessment year 2016-17)
    15
    (xiii)  Renewal energy devices being—











    40






    (a)  Flat plate solar collectors
    (b)  Concentrating and pipe type solar collectors
    (c)  Solar cookers
    (d)  Solar water heaters and systems
    (e)  Air/gas/fluid heating systems
    (f)  Solar crop driers and systems
    (g)  Solar refrigeration, cold storages and air-conditioning systems
    (h)  Solar steels and desalination systems
    (i)  Solar power generating systems
    (j)  Solar pumps based on solar-thermal and solar-photovoltaic conversion
    (k)  Solar-photovoltaic modules and panels for water pumping and other applications
    (l)  Windmills and any specially designed devices which run on wind-mills installed on or before March 31, 2012
    (m)  Any special devices including electric generators and pumps running on wind energy installed on or before March 31, 2012
    (n)  Biogas plant and biogas engines
    (o)  Electrically operated vehicles including battery powered or fuel-cell powered vehicles
    (p)  Agricultural and municipal waste conversion devices producing energy
    (q)  Equipment for utilising ocean waste and thermal energy
    (r)  Machinery and plant used in the manufacture of any of the above sub-items
    (9)  (i) Books owned by assessees carrying on a profession—
    (a)  Books, being annual publications
    40
    (b)  Books, other than those covered by entry (a) above
    40
    (ii)  Books owned by assessees carrying on business in running lending libraries
    40
    IV. SHIPS
    (1)  Ocean-going ships including dredgers, tugs, barges, survey launches and other similar ships used mainly for dredging purposes and fishing vessels with wooden hull
    20
    (2)  Vessels ordinarily operating on inland waters, not covered by sub-item (3) below
    20
    (3)  Vessels ordinarily operating on inland waters being speed boats [See Note 10 below the Table]
    20
    PART B
    INTANGIBLE ASSETS
    Know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature
    25

    Notes:

    1. "Buildings" include roads, bridges, culverts, wells and tubewells.

    2. A building shall be deemed to be a building used mainly for residential purposes, if the built-up floor area thereof used for residential purposes is not less than sixty-six and two-third per cent of its total built-up floor area and shall include any such building in the factory premises.

    3. In respect of any structure or work by way of renovation or improvement in or in relation to a building referred to in Explanation 1 of clause (ii) of sub-section (1) of section 32, the percentage to be applied will be the percentage specified against sub-item (1) or (2) of item I as may be appropriate to the class of building in or in relation to which the renovation or improvement is effected. Where the structure is constructed or the work is done by way of extension of any such building, the percentage to be applied would be such percentage as would be appropriate, as if the structure or work constituted a separate building.

    4. Water treatment system includes system for desalination, demineralisation and purification of water.

    5. "Electrical fittings" include electrical wiring, switches, sockets, other fittings and fans, etc.

    5A. Rate of depreciation shall be 40% if conditions of Rule 5(2) are satisfied.

    5B. Applicable from the Assessment year 2004-05.

    6. "Commercial vehicle" means "heavy goods vehicle", "heavy passenger motor vehicle", "light motor vehicle", "medium goods vehicle" and "medium passenger motor vehicle" but does not include "maxi-cab", "motor-cab", "tractor" and "road-roller". The expressions "heavy goods vehicle", "heavy passenger motor vehicle", "light motor vehicle", "medium goods vehicle", "medium passenger motor vehicle", "maxi-cab", "motor-cab", "tractor" and "road-roller" shall have the meanings respectively as assigned to them in section 2 of the Motor Vehicles Act, 1988 (59 of 1988).

    7. "Computer software" means any computer programme recorded on any disc, tape, perforated media or other information storage device.

    8. "TUFS" means Technology Upgradation Fund Scheme announced by the Government of India in the form of a Resolution of the Ministry of Textiles vide No. 28/1/99-CTI of 31-3-1999.

    9. Machinery and plant includes pipes needed for delivery from the source of supply of raw water to the plant and from the plant to the storage facility.

    10. "Speed boat" means a motor boat driven by a high speed internal combustion engine capable of propelling the boat at a speed exceeding 24 kilometers per hour in still water and so designed that when running at a speed, it will plane, i.e., its bow will rise from the water.



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