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2013 (7) TMI 361 - ALLAHABAD HIGH COURTDepreciation by straight line method - Till previous year assessee exempted u/s 10(29) - Held that:- basic and normal scheme of depreciation under the Indian Income Tax Act, is that value of the asset decreases every year, being a percentage of the written down value which in the first year is the actual cost and in succeeding years, the actual cost less all depreciation actually allowed under the Income Tax Act or any Act repealed thereby. Thus, depreciation allowance is in respect of such assets as are used in the business and is to be calculated on the written down value - in the "straight line method", depreciation is allowed at a fixed percentage of the original cost year after year till the original cost is exhausted. Assessee has claimed the entire depreciation during the assessment year under consideration, which is not permissible as per the scheme of the depreciation - Though, the income was exempted under section 10 (29) of the Act, but it does not bar the assessee to claim the notional depreciation in its books of accounts - Even the income is exempted nonetheless, the balance-sheet etc. will have to be prepared as per law for each assessment year as per principle of accounting - Matter remanded to the AO to allow depreciation on various items of the assets by taking notional depreciation for the earlier years, but the depreciation cannot be more than 100% of the value of the assets - Decided in favour of Revenue.
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