Even if an asset is not actually used in business, once it enters the block of assets, it should be allowed depreciation. T. C. A. Ramanujam Depreciation allowance is a concession granted by the state in the computation of income based on very many factors relevant to a wholesome fiscal administration. It represents diminution in the value of the asset when applied to making profits or gains. It is related to the asset and is a notional loss as against actual loss in the sense of outgoings of a business. Under Section 32 of the Income-Tax Act, 1961, depreciation allowance is statutory and not confined expressly to diminution in value of the asset by reason of wear and tear. It can be allowed according to accounting principles. Key conditions The allowance is dependent on fulfilment of two vital conditions. The asset must be...
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