While calculating depreciation as per Income-tax Act, any sale/discard value is reduced from the asset block and depreciation calculated on the balance amount.

The following complications arise when there is sale and acquisition during the same year.

Where there is sale and purchase during same year, resulting in

• positive closing value of block at the year end

• negative closing value of block at the year end

• negative closing value of block in the period > 180 but positive closing value at the year end

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This is explained by way of example in the table given below

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation for Period  > 180The calculation in above cases is done on the following basis

 

Asset purchased and put to use >180 days and sold in the same year then cost will be taken as

• Opening + Total of Purchase) – (> 180 Sale + < 180 Sale)

• If value is in Negative then it is deemed to be 0

Depreciation for Period < 180

Asset purchased and put to use <180 days and sold in the same year then cost will be taken as

• Opening + Total of Purchase) – (<180 Sale)

• If value is in Negative then then it is deemed to be 0