Determination of initial depreciation.
39. (1) A person shall be allowed, in addition to depreciation, an initial depreciation of business capital assets if,—
(a) the person is engaged in the business of manufacture or production of any article or thing;
(b) the asset is a new asset forming part of the class of assets "Machinery and Plant" specified in the Fifteenth Schedule;
(c) the asset was not used either within or outside India by any other person before its installation by the person;
(d) the asset is not installed in any office premises or any residential accommodation, including accommodation in the nature of a guest-house;
(e) the asset is not in the nature of any office appliances; and
(f) the whole of the actual cost of the asset is not allowed as a deduction (whether by way of depreciation or otherwise) in computing the income under the head "Income from business" of any financial year.
(2) The initial depreciation referred to in sub-section (1),—
(a) shall be an amount equal to twenty per cent. of the actual cost of the asset; and
(b) shall be allowed in the financial year in which the asset is used for the first time for the purposes of the business of the person.
(3) The deduction under this section in respect of such asset shall be restricted to fifty per cent. of the sum referred to in sub-section (2), if the asset is used for the purposes of business for a period of less than one hundred and eighty days in the relevant financial year.
