SAMPLE CHAPTER
RULE 5*
167
Depreciation 5.1 Statutory background 5.1-1 “Assets”, defined [Explanation 3 to section 32 1 ] a b 5.1.1-1 Explanation 45.1.1-2-vide Circular No. 20/2019, dated 19-8-2019 see Annex 5.7 5.1.1-3 Lord Eldon Cruttwell Lye Wood V.C. Churton Douglas Trego Hunt Lord Herschell CIT B. C. Srinivasa Shetty *SECTION 32(1).
I-5 CONTENTS PAGE List of Circulars/Notifications/Press Notes, etc. I-17 RULE 2AHouse Rent Allowance (HRA) 1 2BLeave Travel Concession/Assistance (LTC/ LTA) 6 2BAVoluntary retirement compensation 23 2BBSpecial allowances 31 2BBAFamily pension to heirs of Armed Forces (including Para-Military Forces) member 35 2BBBPercentage of Government grant for considering University, Hospital, etc., as substantially financed under section 10(23C) (iiiab)/(iiiac) 36 2CApplication for grant of approval of a fund/ trust/institution/university/other educational institution/hospital/other medical institution under first proviso to section 10(23C) 38 2DB &Pension fund 51 2DC 2DCA Computation of minimum investment/lending and exempt income for the purposes of section 10(23FE) 55 2DDComputation of exempt income of specified fund for the purposes of section 10(23FF) 75 2FGuidelines for setting up an Infrastructure Debt Fund 78 3Valuation of perquisites 81
RULE PAGE CONTENTS I-6 3AExemption of medical benefits from perquisite value in respect of medical treatment of prescribed diseases/ailments in hospitals approved by PCCIT/CCIT 149 3BComputation of annual accretion 162 4Unrealised Rent 165 5Depreciation 167 5ACFurnishing of audit report under section 33AB(2) 209 5ADFurnishing of audit report under section 33ABA(2) 210 5C, 5D &Guidelines, conditions, etc., for approval to 5Ebe granted to a Research Association/University/College/Other Institution 211 5CAIntimation for continuance of approval under section 35(1)(ii)/(iia)/(iii) 216 5FGuidelines, conditions, etc., for approval to be granted to a company registered in India 218 5GTaxation on income from patent 221 6Prescribed authorities for certain provisions of section 35 & conditions for approval under section 35(2AA) & (2AB) 222 6AExpenditure for obtaining right to use spectrum for telecommunication services 226 6AAD & Guidelines for approval of agricultural 6AAEextension project & conditions for notification under section 35CCC 227 6AAF,Guidelines for approval of skill develop6AAG &ment project & conditions for notification 6AAHunder section 35CCD 231 6ABForm of audit report for claiming deduction under sections 35D & 35E 236 6ABA Computation of aggregate average advances for purposes of section 36(1)(viia) 237
RULE PAGE I-7 CONTENTS 6ABAAInfrastructure facility for the purposes of section 36(1)(viii) 239 6ABBAOther permissible electronic modes for payment/receipt 241 6DDDisallowance of cash payments 242 6DDA & Recognised stock exchange in respect of trad6DDBing in derivatives 262 6EAmount carried over to a reserve for unexpired risks in case of insurance business (other than life insurance) 265 6EA &Taxation of interest income of certain insti6EBtutions, banks, company, etc., in relation to specified categories of bad or doubtful debts 266 6FBooks of account and other documents to be kept and maintained under section 44AA(3) by persons carrying on certain professions 270 6GReport of audit of accounts to be furnished under section 44AB 278 6GAForm of report of audit of accounts to be furnished under section 44DA(2) 291 6HForm of report of an accountant under section 50B(3) 292 7Income which is partially agricultural and partially from business 294 7AIncome from the manufacture of rubber 299 7BIncome from the manufacture of coffee 301 8Income from the manufacture of tea 303 8AAMethod of determination of period of holding of capital asset in certain cases 310 8ABAttribution of income taxable under section 45(4) to the capital assets remaining with the specified entity, under section 48 311
RULE PAGE CONTENTS I-8 8ACComputation of short-term capital gains and written down value under section 50 where depreciation on goodwill has been obtained 324 8ADComputation of capital gains for purposes of section 45(1B) 332 8BGuidelines for notification of zero coupon bonds 347 8CComputation of pro rata amount of discount on a zero coupon bond for purposes of section 36(1)(iiia) 350 8DMethod for determining amount of expenditure in relation to income not includible in total income 351 9ADeduction in respect of expenditure on production of feature films 363 9BDeduction in respect of expenditure on acquisition of distribution rights of feature films 371 9CConditions for carrying forward or set-off of accumulated loss and unabsorbed depreciation allowance in case of amalgamation 374 9DCalculation of taxable interest relating to contribution in a provident fund/ recognised provident fund, exceeding specified limit 378 10Determination of income in the case of nonresidents 400 10A toComputation of arm’s length price 406 10CA 10CBComputation of interest income pursuant to secondary adjustments 508 10D &Information and documents to be kept & 10DAmaintained under section 92D 516
10RBRelief in tax payable under section 115JB(1) due to operation of section 115JB(2D)
RULE PAGE I-9 CONTENTS
national group 524
529
toAdvance
535 10T
558
to Safe
Rules
10THD actions &
Domestic Transactions 560 10UGAAR not to apply in certain cases 576 10UADetermination of consequences of impermissible avoidance arrangement 587 10UB toReference to PCIT/CIT for invocation of 10UFGAAR 589
toCertain
business 10VBconnection in India 593
80DD & 80U 601 11AARequirement for approval of institution or fund under section 80G(5)(vi) 686 11BDeduction in respect of rents paid 691 11DDDeduction in respect of medical treatment of specified diseases & ailments 693 11EAGuidelines for
industrially backward districts for the purpose of deduction under section 80-IB(5) 695 11-OA &Guidelines for notification of certain speci11-OBfied businesses under section 35AD 699 11P toTonnage Tax Scheme for Shipping Com11Tpanies 704
10DBFurnishing of report in respect of an inter-
10EReport from an accountant to be furnished under section 92E
10F
Pricing Agreement Scheme
10TA
Harbour
for International Trans-
Specified
10V
activities not to constitute
11AMedical authority for certifying autism, cerebral palsy and multiple disabilities and certificate to be obtained from the medical authority for the purposes of deduction under sections
specifying
RULE PAGE CONTENTS I-10 11U &Determination of fair market value of prop11UAerty other than immovable property 709 11UAA &Special provision for full value of conside11UADration for transfer of share other than quoted share 735 11UABDetermination of Fair Market Value for Inventory 737 11UACCases in which provisions of section 56(2)(x) not to apply 738 11UAEComputation of fair market value of capital assets for the purposes of section 50B 753 11UB &Determination of value of assets and ap11UCportionment of income in certain cases 756 11UDThresholds for the purposes of significant economic presence 769 11UE &Indirect transfer prior to 28-5-2012 of assets 11UFsituate in India 771 12Return of income 811 12APreparation of return by authorised representative 836 12AAVerification of return by whom 837 12ABConditions for furnishing return of income by persons referred to in section 139(1)(b) 839 12ACUpdated return 840 12ADReturn of income under section 170A 864 12CTax on income accruing/arising to/received from venture capital companies and venture capital funds 867 12CATax on income of unit holder and business trust 868 12CBTax on income of investment fund and its unit holders 869 12CCTax on income from Securitisation Trusts 870
RULE PAGE I-11 CONTENTS 12DPower to call for information by prescribed Income-tax Authority 871 12ERegular assessment 874 12FInquiry before assessment 875 14Inquiry before assessment 876 14A &Special audit 877 14B 15Notice of demand 886 15ADeclaration under section 158A 888 16Application under section 158AB to defer filing of appeal before the ITAT or the jurisdictional High Court 890 16BExemption in respect of remuneration/fee/ any other income received by consultant or his employee 893 16CExemption in respect of income of a fund for the welfare of employees or their dependants 894 16CCForm of audit report prescribed under 10th proviso to section 10(23C) 896 16DDSpecial provision in respect of newly established undertakings in free trade zone, etc. 901 17Exercise of option, etc., under section 11 or 10(21) 902 17AApplication for registration of charitable or religious trusts, etc. 909 17AABooks of account and other documents to be kept and maintained 915 17BAudit report in case of charitable or religious trusts 921 17CForms or modes of investment or deposits by a charitable or religious trust or institution 926
17CASpecial provisions relating to voluntary contributions received by electoral trust 929
17CBTax on accreted income of certain Trusts and Institutions
18AAAPrescribed authority for the purposes of section 80G(2)(a)(iiif) 946
18AAAAA Guidelines for specifying an association/ institution for the purposes of section 80G(2)(c)
18ABFurnishing of statement of particulars and certificate under section 80G(5)( viii)/(ix) or under section 35(1A)
18BBBForm of audit report for claiming deduction under section 80-IA/80-IB/80-IC 950
18BBEComputation of profits of certain activities forming integral part of a highway project 954
18CEligibility of industrial parks for benefit under section 80-IA(4)(iii) 956
19AB Form of report for claiming deduction under section 80JJAA
19ACForm of certificate to be furnished under section 80QQB(3)
19ADPrescribed authority & form of certificate to be furnished under section 80RRB(2) 968
19AEForm of accountant’s report to be furnished under section 80LA(3)
20Guidelines for approval under section 80C(2)(xix) 970
20AGuidelines for approval under section 80C(2)(xx)
21ARelief when salary is paid in arrears or in advance, etc.
21AA Furnishing of particulars for claiming refund under section 89
RULE PAGE CONTENTS I-12
939
947
948
966
967
969
972
974
978
RULE PAGE I-13 CONTENTS 21AAATaxation of income from retirement benefit account maintained in a notified country 979 21ABInformation to be provided for claiming relief under an agreement referred to in sections 90 & 90A 981 21ACFurnishing of authorisation and maintenance of documents, etc., for the purposes of section 94A 983 21ADExercise of option under section 115BA(4) 985 21AEExercise of option under section 115BAA(5) 986 21AFExercise of option u/s 115BAB(7) 989 21AGExercise of option under section 115BAC 990 21AHExercise of option under section 115BAD(5) 993 21AI,Other conditions for specified fund & com21AIA &putation of exempt income of such fund for 21AJAthe purposes of section 10(4D) 994 21AJ & Determination of income of a specified fund 21AJAAunder section 115AD(1A)/(1B) 999 21AKExemption in respect of any income accrued/arisen to/received by a non-resident with regard to specified forwards contracts/ derivatives entered into with an offshore banking unit of an IFSC 1002 21ALOther conditions required to be fulfilled by the original fund 1004 26 toDeduction of tax at source 1006 37BC 29AForm of certificate to be furnished under section 80QQB(4)/80RRB(3) 1150 37C toCollection of tax at source 1151 37J 38 & 39Payment of advance tax 1176 40BAccountant’s report u/s 115JB(4) 1178 40BAAccountant’s report u/s 115JC(3) 1179
RULE PAGE CONTENTS I-14 40BBDetermination of amount received by domestic company in respect of issue of shares 1180 40GRefund claim under section 239A 1183 42 to 44Tax clearance certificates 1184 44DAExercise of option under section 245M(1) and intimation thereof 1187 44DAA toDispute Resolution Committee 1189 44DAD 44E toAdvance Rulings 1200 44FA 44GMutual Agreement Procedure 1213 44GAProcedure to deal with requests for Bilateral/Multilateral Advance Pricing Agreements 1256 45 & 46Form of Appeal to CIT(A) & Mode of Service 1258 46AProduction of additional evidence before CIT(A) 1261 47Form of appeal and memorandum of crossobjections to Appellate Tribunal 1264 49 to 66Authorised representatives 1266 67 to 81Recognised provident funds 1277 82 to 97Approved superannuation funds 1301 98 to 111Approved gratuity funds 1312 111AA &Reference to Valuation Officer 1322 111AB 111B Publication and circulation of Board’s order 1326 112Search and seizure 1328 112CRelease of remaining assets 1339 112DRequisition of books of account, etc. 1343 112EForm of information under section 133B(1) 1347
RULE PAGE 113Disclosure of information respecting assessees 1348 114 &Application for allotment of a Permanent 114AAAAccount Number 1349 114AApplication for allotment of a Tax Deduction and Collection Account Number 1367 114AABClass or classes of persons to whom provisions of section 139A shall not apply 1369 114B,Quoting/Intimation of Permanent Account 114BB,Number 1371 114C & 114D 114BATransactions for which persons are required to apply for allotment of PAN 1383 114DAFurnishing of annual statement by a nonresident having liaison office in India 1384 114DBInformation or Documents to be furnished u/s 285A 1385 114E to Furnishing of Statement of Financial Trans114Haction (SFT) 1387 114-IAnnual Information Statement (AIS) 1428 115Rate of exchange for conversion into rupees of income expressed in foreign currency 1431 115ARate of exchange for conversion of rupees into foreign currency and reconversion of foreign currency into rupees for the purposes of computation of capital gains under 1st proviso to section 48 1434 117B &Recovery by TRO 1436 117C 119AProcedure to be followed in calculating interest 1438 119AAModes of payment for the purpose of section 269SU 1439 I-15 CONTENTS
RULE PAGE 121AForm of statement to be furnished by producers of cinematograph films or persons engaged in specified activity 1440 125Electronic payment of tax 1442 126Computation of period of stay in India in certain cases 1444 127Service of notice, summons, requisition, order and other communication 1445 127AAuthentication of notices and other documents 1456 128Foreign Tax Credit 1458 129Form of application under section 270AA 1462 130Omission of certain rules and forms and savings 1463 131Electronic furnishing of forms, returns, statements, reports, orders, etc. 1465 132Application for Recomputation of Income u/s 155(18) 1469 CONTENTS I-16
RULE 5* Depreciation
5.1 Statutory background
5.1-1 “Assets”, defined [Explanation 3 to section 32 1 ]
5.1.1-1
Circular No. 20/2019, dated 19-8-2019 see Annex 5.7 5.1.1-3
Lord Eldon Cruttwell Lye
Wood V.C. Churton Douglas
Trego Hunt Lord Herschell
*SECTION 32(1).
167
a b
-
Explanation 4
-
5.1.1-2 -
vide
CIT B. C. Srinivasa Shetty
IRC Muller & Co.’s Margarine Ltd. -
horticulturally and botanically geographically historically magnet comparative dynamics Philosophically Physically and psychologically sociologically Biologically Trego Hunt Architecturally
CIT Chunilal Prabhudas & Co.
CIT Smifs Securities Ltd.
negated and overturned by the Finance Act, 2021 nil
Rule 5 168
i.e.
I & B Seeds (P.) Ltd. v. DCIT
5.1-2 Concept of depreciation Black’s Law Dictionary
I. C. D. S. Ltd. CIT
CIT Punalur Paper Mills Ltd. Mysore Minerals Ltd. CIT
5.1.2-1
Allahabad Glass Works CIT
Appavu Pillai CIT
CIT Kanoria General Dealers P. Ltd.
5.1.2.1-1 Depreciation in case of exempted asset/income
CIT Krishi Upaj Mandi Samiti, Timarni
P.
169 Rule 5
P. K. Badiani CIT
5.1.2-2
CIT U. P. State Warehousing Corporation
CIT Pushparthy Packs P. Ltd. Karnataka Bank Ltd. Asstt. CIT
5.1.2-3
5.1.2-4
CIT S. Palaniswamy
CESC Ltd. CIT
CIT Mirza Ataullaha Baig
S. P. Jaiswal Estates P. Ltd. CIT
5.1-3 Statutory background of section 32 1 i i
see para 5.2
5.1-4 Statutory background of section 32 1 ii ii see para 5.3
5.1.4-1 CIT Birla Jute & Industries Ltd.
5 170
Rule
-
-
11 a
5.1.4-2
Add:—
For PY 2019-20 relevant to AY 2020-21:—
Less:—
Less:—
WDV of block of intangible assets (including goodwill) as on 31-3-2020
Less:— i.e.
WDV of block of intangible assets (including goodwill) as on 1-4-2020
For PY 2020-21 relevant to AY 2021-22:— WDV of block of intangible assets (including goodwill of a business or profession) as on 1-4-2020 since goodwill was part of block of intangible assets on which depreciation was obtained in PY 2019-20
Less:— Actual cost of goodwill falling within that block (-) {Depreciation actually allowed up to AY 198788 (+) Amount of depreciation that would have been allowable for such goodwill for and from AY 1988-89 as if the goodwill was the only asset in the relevant block of assets}, so, however, that the amount of such reduction does not exceed the WDV as on 1-4-2020
171 Rule 5 b
Steps Add/Less Particulars Amount
5.1.4-3
Z
Add:—
WDV of block of intangible asset(s) (excluding goodwill of a business or profession) as on 1-4-2020
Less:—
Less:—
WDV of block of intangible assets (excluding goodwill) as on 31-3-2021
Less:— i.e.
WDV of block of intangible assets (excluding goodwill) as on 1-4-2021
For PY 2021-22 relevant to AY 2022-23:—
WDV of block of intangible assets as on 1-4-2021
Add:—
Less:—
Less:—
WDV of block of intangible assets as on 31-3-2022
Steps Add/Less Particulars Amount
Rule 5 172
Z
Less:—
i.e.
WDV of block of intangible assets as on 1-4-2022
For PY 2022-23 relevant to AY 2023-24:—
WDV of block of intangible assets as on 1-4-2022
Add:—
Less:—
Less:—
Less:—
WDV of block of intangible assets as on 31-3-2023
WDV of block of intangible assets as on 1-4-2023
173
5
Add/Less Particulars Amount
Rule
Steps
-
i.e.
ii a i ii
CIT
b
5.1.4-4
see CIT Punjab Chemi. Plants Ltd.
Ansal Properties & Industries Ltd.
CIT Sundaram Fasteners Ltd.
Burrakur Coal Co. Ltd. CIT
CIT Mahindra Sintered Products Ltd. Warner Hindustan Ltd. CIT
Avasarala Technologies Ltd. JCIT
CIT Hooghly Mills Ltd. SLP granted in Hooghly Mills Co. Ltd. CIT
CIT Hoogly Mills Co. Ltd.
CIT Luwa India Ltd. -
5.1.4.4-1 Depreciation on foreign motor cars used by tour operators/travel agents, clarification
vide Circular
No. 609, dated 29-7-1991; Circular No. 622, dated 6-1-1992; and Circular No. 652, dated 14-6-1993 see, Annex 5.5
5.1-5 Ownership of assets
5.1.5-1
Mysore Minerals Ltd. CIT
Dalmia Cement Bharat Ltd. CIT
Rule 5 174
-
CIT Associated Cement Co. Ltd.
5.1.5-2 -
CIT Doongaji & Co. Distillery
5.1.5-3
A. M. Ponnuranga Mudaliar CIT
CIT Geo Tech Construction Corpn.Gowersons Publishers P. Ltd. CIT
ACIT Claridges Hotels P. Ltd.
5.1.5-4
Hotel Skylark & Restaurant P. Ltd. CIT
CIT Guru Nanak Cane Crushing Factory CIT Jawahar Kala Kendra
CIT Bhushan Steels & Strips Ltd.
5.1.5-5
M. M. Fisheries P. Ltd. CIT
5.1.5-6
Karan Raghav Export P. Ltd. CIT CIT Aravali Finlease Ltd.
5.1.5-7
PCIT Asian Mills P. Ltd.
175 Rule 5
-
vide Circular No. 9, dated 23-3-1943 see, Annex 5.1
I. C. D. S. Ltd. CIT
Multican Builders Ltd. CIT CIT Kotak Mahindra Finance Ltd.
CIT Sundaram Finance Ltd.
CIT Shaan Finance P. Ltd.
Prasad Multi Services P. Ltd. DCIT
Rule 5 176
inter alia i ii iii Atlas Cycle
CIT
Industries Ltd.
CIT Mannapuram General Finance & Leasing Ltd.
CIT Madan & Co. -
CIT Bansal Credits Ltd. However
Soma Finance & Leasing Co. Ltd.
CIT Kotak Mahindra Finance Ltd. DCIT
5.1.5.7-1 Operating lease CIT Shree Rajasthan Syntex Ltd.
5.1.5.7-2 Finance lease State Bank of India DCIT-
Poonawalla Fincorp Ltd. v. PCIT
5.1.5-8
CIT Bombay Burmah Trading Corporation Ltd. SLP dismissed in PCIT Bombay Burmah Trading Corporation Ltd.
see CIT SRF Ltd.
5.1.5-9
177 Rule 5
Madras Industrial Investment Corporation Ltd. CIT
vide Circular No. 9/2014, dated 23-4-2014 see Annex 5.6
North Karnataka Expressway Ltd. CIT
DCIT v. Ashoka Dhankuni Kharagpur Tollway Ltd.
5.1-6 Used for the purposes of business or profession
5.1.6-1 ‘
Liquidators of Pursa Ltd. CIT
On the contrary
Gulabchand Agrawal CIT
CIT Oswal Agro Mills Ltd.
Malayala Manorama Co. Ltd.
Dineshkumar
Rule 5 178
CIT
