(1) A deduction in respect of depreciation of— (a) buildings, machinery, plant or furniture, being tangible assets; (b) know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets acquired on or after the 1st April, 1998, not being goodwill of a business or profession, owned wholly or partly by the assessee and used wholly and exclusively for the purposes of the business or profession, shall be allowed, as per the provisions of this section. (2) In case of assets referred to in sub-section (1) of an undertaking engaged in generation or generation and distribution of power, the deduction in respect of depreciation shall be such percentage of its actual cost to the assessee, as may be prescribed.
CH. IV D.- PROFITS AND GAINS OF BUSINESS OR PROFESSION [Sec 26-66] (3) (a) In case of any block of assets, deduction in respect of depreciation shall be such percentage of its written down value, as may be prescribed; (b) when any building, machinery, plant or furniture is partly, or not wholly and exclusively, used for the purposes of the business or profession, the deduction under clause (a) shall be restricted to the fair proportionate part thereof as determined by the Assessing Officer, having regard to the usage of such building, machinery, plant or furniture for the purposes of the business or profession; (c) when deduction of actual cost in respect of any machinery or plant has been allowed under section 54, no deduction under this sub-section shall be allowed. (4) The deduction under this section shall be restricted to 50% of the prescribed rate, if such asset, being asset referred to in sub-sections (2) and (3) is–– (a) acquired by the assessee during the tax year; and (b) put to use for the purposes of business or profession for less than one hundred and eighty days in that tax year. (5) The aggregate deduction in respect of depreciation allowable to the predecessor and successor in cases of succession under section 70(1)(zd) or (ze) or (zf), or section 313, or to the amalgamating and the amalgamated company in the case of amalgamation, or to the demerged and resulting company in the case of demerger, as the case may be, for any tax year, shall not exceed the deduction calculated at the prescribed rates under this section as if the succession, amalgamation or demerger had not taken place, and such deduction shall be allowed on pro rata basis based on number of days for which assets were used by the following:–– (a) predecessor and successor, in case of such succession; or (b) amalgamating company and the amalgamated company in case of an amalgamation; or (c) demerged company and the resulting company in case of a demerger. (6) Where a building, not owned by the assessee, is held on lease or by any other right of occupancy is used for the purposes of business or profession of the assessee, and if any capital expenditure is incurred by the assessee for the purposes of business or profession on construction of any structure or any work by way of renovation, extension or improvement to such building, then such structure or work shall be treated as a building owned by the assessee for the purposes of this section. (7) The provisions of this section shall apply whether or not the assessee has claimed deduction for depreciation in computing his total income. (8) In addition to deduction under sub-section (3), additional deduction in respect of depreciation for any new machinery or plant shall be allowed, when— (a) the assessee is engaged in the business of manufacture or production of any article or thing or in the business of generation, transmission or distribution of power;
(b) the assessee acquires and installs the new machinery or plant; (c) the new machinery or plant is first put to use by the assessee for the purposes of business; and (d) the new machinery or plant (not being a ship or an aircraft)— (i) was not used either within or outside India by any other person before its installation by the assessee; (ii) is not installed in any office premises or any residential accommodation, including accommodation in the nature of a guest house; (iii) is not in the nature of any office appliances or road transport vehicle; or (iv) is not an asset on which the whole of the actual cost is allowed as a deduction (whether by way of depreciation or otherwise) in computing the income under the head “Profits and gains of business or profession” of any tax year.