Mahidhar - 23.07.2002 at 5.30 AM at Mandapeta.

Section 205 of the Companies Act, 1956, prescribes the methods of chargingdepreciation. The
relevant etracts thereof are as follo!s"
(2) depreciation shall be provided either-
(a) to the extent specified in section 350 or
(b) in respect of each ite! of depreciable asset" for s#ch an a!o#nt as is arrived at b$ dividin% ninet$ five
percent of the ori%inal cost thereof to the co!pan$ b$ the specified period in respect of s#ch asset or
(c) on an$ other basis approved b$ the &entral 'overn!ent (hich has the effect of (ritin% off b$ (a$
of depreciation ninet$ five per cent of the ori%inal cost to the co!pan$ of each s#ch depreciable asset on
the expir$ of the specified period or
(d) as re%ards an$ other depreciable" asset for (hich no rate of depreciation has been laid do(n b$ this
Act or r#les !ade there#nder" on s#ch basis as !a$ be approved b$ the &entral 'overn!ent b$ the
%eneral order p#blished in the )fficial 'a*ette or b$ an$ special order in an$ partic#lar case+
,rovided that (here depreciation is provided for in the" !anner laid do(n in cla#se (b) or cla#se (c)" then"
in the event of the depreciable asset bein% sold" discarded" de!olished or destro$ed the (ritten do(n
val#e thereof at the end of the financial $ear in (hich the asset is sold" discarded" de!olished or
destro$ed" shall be (ritten off in accordance (ith the proviso to section 350.
..
(5) -.pecified period/ in respect of an$ depreciable asset shall !ean the n#!ber of $ears at the end of
(hich at least ninet$-five per cent of the ori%inal cost of the asset to the co!pan$ (ill have been provided
for b$ (a$ of depreciation if depreciation (ere to be calc#lated in accordance (ith the provisions of
section 350.
#e are prod$cing belo! the %ates of depreciation $nder the Companies Act as mentioned in
Sched$le &'(
schedule xiv
)See sections 205 and *50+
%ates of depreciation
Nature of assets Single Shift Double Shift Triple Shift
WDV SLM WDV SLM WDV SLM
1 2 3 4 5 6 7
I.
(a
)
BUILDINGS(other
than factory buildings)
[NESD]
5% 1.6% !.. !.. !.. !..
(b
)
FACTORY
BUILDINGS
1"%. .#% !.. !.. !.. !..
()
PURELY
TEMPORARY
ERECTIONSsuch as
$ooden structures
1""% 1""% !.. !.. !.. !..
II. PLANT AND
MACHINERY
1
[(i) %eneral rate
a&&licable to'(
(a) &lant and )achinery
(not being a shi&) other
than continuous &rocess
&lant for $hich no
s&ecial rate has been
&rescribed under (ii)
belo$
1.*1% #.+5% ,".-+% +.#,% ,+.-,% 1".#%
(b) continuous &rocess
&lant' ,[. . .] for
$hich no s&ecial rate has
been &rescribed under (ii)
belo$ [NESD]
15.% 5.,-% !.. !.. !.. !..]
(ii) S&ecial rates
A.1./ine)atogra&h
fil)s 0 1achinery
used in the &roduction
and e2hibition of
cine)atogra&h fil)s
[NESD]
,"% +."+% !.. !.. !.. !..
(a) 3ecording
e4ui&)ent' re&roducing
e4ui&)ent' de5elo&ing
)achines' &rinting
)achines' editing
)achines' synchronisers
andstudio lights e2ce&t
bulbs
(b) 6ro7ecting e4ui&)ent
of fil) e2hibiting
concerns
2. /ycles [NESD]

[3. Electrical )achinery'

89ray and electro9
thera&eutic a&&aratus and
accessories thereto'
)edical' diagnostic
e4ui&)ents' na)ely' cat9
scan' ultrasound
)achines' E/% )onitors'
etc. [NESD]
,"% +."+% !.. !.. !.. !..
4. :uice boiling &ans
(;arhais) [NESD]
,"% +."+% !.. !.. !.. !..
5. 1otor9cars' )otor9
cycles' scooters and other
)o&eds [NESD]
,5.-*% *.5% !.. !.. !.. !..
6. Electrically o&erated
5ehicles including battery
&o$ered or fuel cell
&o$ered 5ehicles
[NESD]
,"% +."+% !.. !.. !.. !..
7. Sugarcane crushers
(indigenous ;olhus and
belans) [NESD]
,"% +."+% !.. !.. !.. !..
8. %lass )anufacturing
concerns e2ce&t direct
,"% +."+% "% 11.1% #"% 16.,1%
fire glass
)elting furnaces 0
3ecu&erati5e and
regenerati5e glass
)elting furnaces
9. 1achinery used in the
)anufacture of electronic
goods and co)&onents
15.6,% 5.-% ,.#,% -.#6% 1.,% 11.-+%]
B. 1.
#
[<ero&lanes' aero
engines' si)ulators'
5isual syste) and 4uic;
engine change e4ui&)ent
[NESD]
16.,% 5.6%]
2. /oncrete &i&es
)anufacture(1oulds
[NESD]
"% 11.1% !.. !.. !.. !..
3. Dru) containers
)anufacture(1oulds
[NESD]
4. Earth9)o5ing
)achinery e)&loyed in
hea5y construction
$or;s' such as da)s'
tunnels' canals' etc.
[NESD]
5. %lass )anufacturing
concerns e2ce&t direct
fire glass
)elting furnaces(
1oulds [NESD]
6. 1oulds in iron
foundries [NESD]
7. 1ineral oil concerns(
=ield o&erations (abo5e
ground)(6ortable
boilers' drilling tools'
$ell9head tan;s' rigs' etc.
[NESD]
8. 1ines and 4uarries(
6ortable underground
)achinery and earth9
)o5ing )achinery used
in o&en cast )ining
[NESD]
9. 1otor buses and )otor
lorries other than those
used in a business of
running the) on hire
[NESD]
9A. 1otor tractors'
har5esting co)bines
[NESD]
1. 6atterns' dies and
te)&lates [NESD]
11. 3o&e$ay structures
(3o&e$ays' ro&es
and trestle shea5es and
connected &arts
[NESD]
12. Shoe and other
leather goods fabrics(
>ooden lasts used in the
)anufacture of shoes
"% 11.1% #5% 1-.*6% 6"% ,*."5%
C. 1.
5
[.. .. ..]
2. 1otor buses' )otor
lorries and )otor ta2is
used in a business of
running the) on hire
[NESD]
#"% 16.,1% !.. !.. !.. !..
3. 3ubber and &lastic
goods factories(1oulds
[NESD]
4. Data &rocessing
)achines including
co)&uters [NESD]
#"% 16.,1% !.. !.. !.. !..
5. %as cylinders
including 5al5es and
regulators [NESD]
D. 1. <rtificial sil;
)anufacturing )achinery
$ith $ooden &arts
1""% 1""% !.. !.. !.. !..
2. /ine)atogra&h fil)s
(?ulbs of studio lights
3. =lour )ills(3ollers
4. %lass
)anufacturing
concerns(Direct
fire glass
)elting furnaces
4A. =lot %lass 1elting
=urnaces (NESD)
,+% 1"% !.. !.. !.. !..
5. @ron and Steel
industries(3olling
)ill rolls
1""% 1""% !.. !.. !.. !..
6. 1atch factories(
>ooden )atch fra)es
7. 1ineral oil concerns(
(a) 6lant used in field
o&erations (belo$
ground)(Distribution 0
returnable&ac;agesA (b)
6lant used in field
o&erations (belo$
ground) but not including
assets used in field
o&erations (distribution)
(Berbside &u)&s
including underground
tan;s and fittings
8. 1ines and 4uarries(
(a) Cubs' $inding ro&es'
haulage ro&es and sand
sto$ing &i&es
(b) Safety la)&s
9. Salt $or;s(Salt &ans'
reser5oirs and
condensers' etc.' )ade of
earthy' sandy or clay
)aterial or any other
si)ilar )aterial
1. Sugar $or;s(
3ollers
III. FURNITURE AND
FITTINGS
6
[1. %eneral 3ates 1-.1% 6.% !.. !.. !.. !..
[NESD]
2. 3ate for furniture and
fittings used in hotels'
restaurants and boarding
housesA schools' colleges
and other education al
institutions' librariesA
$elfare centresA )eeting
halls' cine)a housesA
theatres and circusesA and
for furniture and fittings
let out on hire for use on
the occasion of )arriages
and si)ilar functions
[NESD]
I!. SHIPS
1. Dcean9going shi&s( ,5.--% *.5% !.. !.. !.. !..
(i) =ishing 5essels $ith
$ooden hull [NESD]
(ii) Dredgers' tugs'
barges' sur5ey launches
and other si)ilar shi&s
used )ainly for dredging
&ur&oses [NESD]
,+."5% 1"% !.. !.. !.. !..
(iii) Dther shi&s [NESD] 1*.-% +% !.. !.. !.. !..
2. Eessels ordinarily
o&erating on inland
$aters(
1#.6% 5% !.. !.. !.. !..
(i) S&eed boats [NESD]
(ii) Dther 5essels
[NESD]
>DE )eans $ritten
do$n 5alue
,"% +."+% !.. !.. !.. !..
SF1 )eans straight line
)ethod
1"% .#% !.. !.. !.. !..
,-T.S
1. 0#ildin%s1 incl#de roads" brid%es" c#lverts" (ells and t#be-(ells.
2. 2actor$ b#ildin%s1 does not incl#de offices" %odo(ns" officers/ and e!plo$ees/ 3#arters" roads"
brid%es" c#lverts" (ells and t#be-(ells.
*. .peed boat1 !eans a !otor boat driven b$ a hi%h speed internal co!b#stion en%ine capable of
propellin% the boat at a speed exceedin% 24 5ilo!etres per ho#r in still (ater and so desi%ned that (hen
r#nnin% at a speed it (ill plane" i.e., its bo( (ill rise fro! the (ater.
/. 6here" d#rin% an$ financial $ear" an$ addition has been !ade to an$ asset" or (here an$ asset has
been sold" discarded" de!olished or destro$ed" the depreciation on s#ch assets shall be calc#lated on
a pro rata basis fro! the date of s#ch addition or" as the case !a$ be" #p to the date on (hich s#ch asset
has been sold" discarded" de!olished or destro$ed.
5. 7he follo(in% infor!ation sho#ld also be disclosed in the acco#nts+
(i) depreciation !ethods #sed and
(ii) depreciation rates or the #sef#l lives of the assets" if the$ are different fro! the principal rates
specified in the .ched#le.
6. 7he calc#lations of the extra depreciation for do#ble shift (or5in% and for triple shift (or5in% shall be
!ade separatel$ in the proportion (hile the n#!ber of da$s for (hich the concern (or5ed do#ble shift or
triple shift" as the case !a$ be" bears to the nor!al n#!ber of (or5in% da$s d#rin% the $ear. 2or this
p#rpose" the nor!al n#!ber of (or5in% da$s d#rin% the $ear shall be dee!ed to be8
(a) in the case of a seasonal factor$ or concern" the n#!ber of da$s on (hich the factor$ or concern
act#all$ (or5ed d#rin% the $ear or 9:0 da$s" (hichever is %reater
(b) in an$ other case" the n#!ber of da$s on (hich the factor$ or concern act#all$ (or5ed d#rin% the $ear
or 240 da$s" (hichever is %reater.
7he extra shift depreciation shall not be char%ed in respect of an$ ite! of !achiner$ or plant (hich has
been specificall$" excepted b$ inscription of the letters ;<.=1 (!eanin% no extra shift depreciation1)
a%ainst it in s#b-ite!s above and also in respect of the follo(in% ite!s of !achiner$ and plant to (hich
the %eneral rate of depreciation of
7
>93.?9@ per cent applies8
(1) Acco#ntin% !achines.
(2) Air-conditionin% !achiner$ incl#din% roo! air-conditioners.
(3) 0#ildin% contractor/s !achiner$.
(4) &alc#latin% !achines.
(5) <lectrical !achiner$8s(itch%ear and instr#!ents" transfor!ers and other stationar$ plant and (irin%
and fittin% of electric li%ht and fan installations.
(6) A$dra#lic (or5s" pipelines and sl#ices.
(7) Boco!otives" rollin% stoc5s" tra!(a$s and rail(a$s #sed b$ concerns" excl#din% rail(a$ concerns.
(8) Mineral oil concerns8field operations+
(a)
:
>C C C@
(b) ,ri!e !overs
(c)
:
>C C C@
(d) .tora%e tan5s (above %ro#nd)
(e) ,ipelines (above %ro#nd)
(f) Detties and dr$ doc5s
(9) Mineral oil concerns8field operations (distrib#tion)85erbside p#!ps" incl#din% #nder%ro#nd tan5s
and fittin%s.
(10) Mineral oil concerns8refineries +
(a)
?
>C C C@
(b) ,ri!e !overs
(c)
?
>C C C@
90
>(d) B,' ,lant@
(11) Mines and 3#arries +
(a) .#rface and #nder%ro#nd !achiner$ (other than electrical !achiner$ and portable #nder%ro#nd
!achiner$)
(b) Aead-%ears
(c) Eails
(d)
?
>C C C@
(e) .hafts and inclines
(f) 7ra!(a$s on the s#rface
(12) ;eo-post fran5in% !achines.
(13) )ffice !achiner$.
(14) )verhead cables and (ires.
(15) Eail(a$ sidin%s.
(16) Eefri%eration plant container" etc. (other than rac5s).
(17) Eope(a$ str#ct#res +
(a) 7restle and station steel (or5.
(b) =rivin% and tension %earin%.
(18) .alt (or5s8Eeservoirs" condensers" salt pans" deliver$ channels and piers if constr#cted of
!asonr$" concrete" ce!ent" asphalt or si!ilar !aterials bar%es and floatin% plant piers" 3#a$s and
Fetties and pipelines for conve$in% brine if constr#cted of !asonr$" concrete" ce!ent" asphalt or si!ilar
!aterials.
(19) .#r%ical instr#!ents.
(20) 7ra!(a$s electric and tra!(a$s r#n b$ internal co!b#stion en%ines8per!anent (a$+ cars8car
tr#c5s" car bodies" electrical e3#ip!ent and !otors tra! cars incl#din% en%ines and %ears.
(21) 7$pe(riters.
(22) 6ei%hin% !achines.
(23) 6ireless apparat#s and %ear" (ireless appliances and accessories.@
(24)
99
>C C C@
92
>0. -&ontin#o#s process plant/ !eans a plant (hich is re3#ired and desi%ned to operate 24 ho#rs a da$.
1. ;ot(ithstandin% an$thin% !entioned in this .ched#le" depreciation on assets" (hose act#al cost does
not exceed five tho#sand r#pees" shall be provided at the rate of h#ndred per cent+@
93
>2rovided that (here the a%%re%ate act#al cost of individ#al ite!s of plant and !achiner$ costin% Es.
5"000 or less constit#tes !ore than 90 per cent of the total act#al cost of plant and !achiner$" rates of
depreciation applicable to s#ch ite!s shall be the rates as specified in Gte! GG of the .ched#le.@
%.3AT.4 2-STS
o 4epreciation for the p$rpose of declaration of 4ividend $nder Section 205 in case of
companies re ...
o Companies Act 5 Changes in 4epreciation %ate on 2lant 6 7achiner8
o .pos$re 4raft of Sched$le &'( to the Companies Act, 1956
o %eferencer on 7CA Circ$lars 2011520129
o Assessee can claim lo!er of depreciation or b$siness loss as claimed in the boo:s of
acco$nt for ...
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