Clause 33 vs. Section 32: A Comparative Analysis of Depreciation Provisions

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..... usinesses. Objective and Purpose The primary objective of Clause 33 is to provide a structured approach to claiming depreciation on assets used in business or professional activities. The clause seeks to align the depreciation rules with modern business practices and asset usage, ensuring that businesses can accurately reflect the wear and tear on their assets in their financial statements. This provision also aims to incentivize investment in new machinery and technology by offering additional depreciation benefits. Detailed Analysis Sub-section (1): Tangible and Intangible Assets Clause 33(1) allows for depreciation on both tangible assets (buildings, machinery, plant, furniture) and intangible assets (know-how, patents, copyrights, .....

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..... leasehold improvements is treated as a building owned by the assessee, allowing for depreciation claims. This provision recognizes the investment made by businesses in enhancing leased properties. Sub-section (7): Unclaimed Depreciation Depreciation can be claimed even if not initially claimed in computing total income, ensuring that businesses are not penalized for oversight in their initial filings. Sub-section (8) and (9): Additional Depreciation Additional depreciation is allowed for new machinery or plant used in manufacturing or power generation. The additional rate is 20% of the actual cost, with adjustments for assets used less than 180 days. This incentivizes investment in new technology and infrastructure. Sub-section (10): .....

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..... n on similar categories of assets. However, Clause 33 explicitly excludes goodwill from intangible assets, aligning with recent judicial interpretations. - Power Generation Assets: Clause 33(2) mirrors Section 32(1)(i) in prescribing depreciation for power generation assets, but with updated regulatory references. - Block of Assets: Clause 33(3) aligns with Section 32(1)(ii) but provides clearer guidance on partial business use and restrictions related to section 54. - Assets Used for Less Than 180 Days: Both provisions restrict depreciation to 50% for short-term asset use, but Clause 33(4) provides a more streamlined approach. - Succession, Amalgamation, and Demerger: Clause 33(5) and Section 32(1)(v) both address depreciation appo .....

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