Depreciation for Second hand machinery purchased, Income Tax

[Ramanathan Seshan]

Dear Experts,

Hope this message finds you well.

I am seeking clarification regarding the charge of depreciation in the context of a transaction between Company A and Company B. Here’s the scenario:

Company A purchases machinery from Company B and it has been using it for three years. As per the management policy of the company A a similar asset has a useful life of 5 years.

With reference to the above, I would like to understand the following:

a) Should we now account for the depreciation for 2 years only as per the IT depreciation rate?

b) What can be other possible way to harvest tax if we want to keep account for depreciation for 5 years under IT Act?

Thanks in advance

Best Regards,

S Ram