Cost of acquisition in case of depreciable assets

To understand the method of computation of depreciation, one must know the meaning of
the following terms:
Block of assets
Written down value
Actual cost

Block of assets : A tax payer may have 13 different blocks(out of which 12 blocks
tangible and 1 block is for intangible asset. These blocks are given bellow.

Number Nature of asset Rate of depreciation

Block 1 Buildings- Residential other than hotel and 5%
boarding houses
Block 2 Buildings-office, factory, godowns, or 10%
buildings (it covers hotel and boarding house)
Block 3 Buildings:
a. Buildings acquired on or after Sep. 1 100%
2002 for installing machinery and plant
forming part of water supply project and
which is put to use for the purpose of
business of providing infrastructure .
b. Temporary erections such as wooden
structures
Block 4 Furniture 10%
Block 5 Plant and Machinery any plant and machinery 15%
(not covered by block 6,7,8,9,10,11 0r 12)
Block 6 Plant and Machinery: ocean going ships 20%
including speed boats
Block 7 Plant and Machinery: Buses, lorries and taxies 30%
used in the business of running them on hire
Block 8 Plant and Machinery: aeroplanes 40%
Block 9 Plant and Machinery: containers made of glass 50%
or plastic used as refills and the following
a. New commercial vehicle
 b. Used in weaving, processing and
garment sector of textile
Block 10 Plant and Machinery: computers including 60%
software and new commercial vehicle acquired
in replacement of vehicle of 15 years age .
It also includes books other than annual
publications, gas cylinders etc
Block 11 Plant and Machinery: energy saving devices 80%
renewal energy rollers in flour mill, sugar
works
Block 12 Plant and Machinery: air pollution control, 100%
water pollution control equipments, annual
publications
Block 13 Intangible assets (acquired after March 25%
31,1998) know-how, patents, copyrights,
trademarks, licenses and other commercial
rights

Written down Value

Step 1. Find out the depreciated value of the block on the April1, 2009

Step 2 to this value add actual cost of the asset acquired (purchased during the PY 2009-10

Step 3 From this deduct money received (together with scrap value) in respect of asset which is
sold

Special situations

1. When the written value of a block of asset is reduced to zero- No depreciation is

admissible.
2. If block of assets ceases to exist- If all assets of the block have been transferred and the
block asset is empty , no depreciation is admissible.

How many days asset put to use Depreciation

Less than 180 days Half of usual depreciation
180 days or more Usual depreciation

Computation of additional depreciation:

Conditions
1. The assessee must be engaged in manufacture/production of any article or thing.
2. New plant and machinery should be acquired and installed after March 31, 2005
3. It should be an eligible plant and machinery.

Rate of additional depreciation

Additional depreciation shall be available @ 20 % of the actual cost of new plant and
machinery. If it is put to use for less than 180 days in the year in which it is acquired , rate of
additional depreciation will be 10 %