“written down value”
The decision most relied on for written down value is CIT v. P.J. Chemicals Ltd. (210 ITR 830), cited in 158 judgments on BharatTax.
Leading authorities on written down value
This Supreme Court decision clarifies the conditions under which a capital subsidy received by an assessee should be reduced from the 'actual cost' of an asset for computing depreciation under Section 43(1) of the Income-tax Act, depending on whether the subsidy directly meets the cost of the asset.
Depreciation is allowable on computer software, including software licenses, at the rate of 60%.
Depreciation under section 32 is allowable even if an asset is not actively used, provided it is kept in a condition of readiness or is put ready for use, as this amounts to passive user.
Rights acquired under a concession agreement for highway construction, which generate revenue through toll collections, constitute an 'intangible asset' under section 32(1)(ii) of the Income-tax Act, 1961, eligible for depreciation, typically at 25%. This includes claiming depreciation on the opening Written Down Value (WDV) for such highway projects.
A registered sale deed, including the sale consideration disclosed therein, cannot be disregarded or contradicted by oral evidence, as documents containing all terms and conditions preclude such oral testimony.
Merely providing a copy of a statement or letters is not sufficient opportunity; when oral evidence is relied upon to replace written evidence, the party against whom it is used must be allowed to cross-examine the person concerned to properly weigh the evidence.
For a share broker, the unrealised value of shares from clients or other trade balances written off is deductible as a bad debt under section 36(1)(vii) if the corresponding income was previously recognized. This principle applies to bad debts arising from revenue transactions, not capital loans.
For banks, bad debts written off from non-rural advances are not subject to the limitations of the provisos to sections 36(1)(vii) and 36(1)(viii), as these provisos apply only to rural advances; section 36(1)(viia) also applies exclusively to rural advances. Additionally, depreciation on investments valued at market price on the balance sheet date is eligible for deduction.
