Depreciation applied in the case of aeroplanes. - Income Tax - 1513/CBDT

INSTRUCTION NO. 1513/CBDT Dated: June 22, 1983 Section(s) Referred: 32 Statute: Income - Tax Act, 1961 A doubt has been raised regarding the rate of depreciation to be applied in the case of aeroplanes. The Receipt Audit has pointed out a case where an aeroplane was allowed depreciation at the rate of 40% under E(1) of item III(ii) of Part-I of Appendix 1 to the Income-tax Rules, 1962. According to Audit, the rate applicable was 30% as per entry D (I) of item III(ii) referred to above. The matter has been examined by the Board in consultation with the Ministry of Law and the C AG and the position is clarified in the following paragraphs. 2. The two relevant entries dealing with the rates of depreciation in the case of aeroplanes and their parts are as under :- D(1) Airplane - Aircrafts' Acrial photographic apparatus (NESA) rate to be applied 30% E(1) Aeroplanes - Aeroengines (NESA)- rate to be applied 40% 3. There are no other entries relating to aeroplanes or its parts specifically. It will be apparent from the above that an aircraft. aerial photographic apparatus as well as aeroengine all come under the heading "Aeroplanes". There is no separate entry relating to other parts of an aeroplane. Thus, if it is a complete aircraft the rate of depreciation admissible would be that specified under entry III (ii) D(I) viz. 30% even though an aeroplane consists of many parts. 4. It is only when depreciation has to be separately allowed on aero-engines that the rate of depreciation would fall under sub-item E(I) of item III(ii). Similar would be the case if aerial photographic apparatus is to be considered for depreciation separately when the rate would fall under sub-item D(I) of item III(ii). 5. No separate rates have been prescribed for other parts of the aeroplane. Hence if such parts come up for consideration for depreciation separately the rate would fall under appropriate head of item III in the first part of the Appendix I and in the absence of any separate entry under item III(i) which provides the general rate in the case of machinery and plant. 6. The above instructions may please be brought to the notice of all the officers working in your charge.