BLOCK OF ASSET [SECTION 2(11)]

Prior to the 1986, the Income-tax Act required the calculation of depreciation in respect of each capital asset separately. Due to differences in depreciation rates depending on the date of purchase, the type of asset, the intensity of use etc., computation of depreciation allowance involved a detailed exercise on the part of the assessee and AO. Moreover, the system of granting the terminal allowance or taxing the balancing charge at the time an asset was sold, demolished, discarded, etc., necessitated the maintenance of records of depreciation already allowed in respect of each asset.

The amendments sought to simplify the system to a great extent by introducing the concept of "block of assets". Sec. 2(11) defines the term block of assets as "a group of assets falling within a class of assets, being building, machinery, plant & furniture, in respect of which the same percentage of depreciation is prescribed."