C.

Profitsandgainsofbusinessorprofession
87[Depreciation88.

5.(1)Subjecttotheprovisionsofsubrule(2),theallowanceunderclause(ii)ofsubsection(1)ofsection
32inrespectofdepreciationofanyblockofassetsshallbecalculatedatthepercentagesspecifiedinthe
secondcolumnoftheTableinAppendixItotheserulesonthewrittendownvalueofsuchblockofassets
asareusedforthepurposesofthebusinessorprofessionoftheassesseeatanytimeduringtheprevious
year:
88a[Provided that in case of a domestic company which has exercised option under subsection (4) of
section115BA,theallowanceunderclause(ii)ofsubsection(1)ofsection32inrespectofdepreciationof
anyblockofassetsentitledtomorethanfortypercentshallberestrictedtofortypercentonthewritten
downvalueofsuchblockofassets.]
89[(1A)Theallowanceunderclause(i)ofsubsection(1)ofsection32oftheActinrespectofdepreciation
ofassetsacquiredonorafter1stdayofApril,1997shallbecalculatedatthepercentagespecifiedinthe
secondcolumnoftheTableinAppendixIAoftheserulesontheactualcostthereoftotheassesseeasare
usedforthepurposesofthebusinessoftheassesseeatanytimeduringthepreviousyear:
Providedthattheaggregatedepreciationallowedinrespectofanyassetfordifferentassessmentyearsshall
notexceedtheactualcostofthesaidasset:
Providedfurtherthat the undertaking specified in clause (i) of subsection (1) of section 32 of the Act
may,insteadofthedepreciationspecifiedinAppendixIA,atitsoption,bealloweddepreciationundersub
rule(1)readwithAppendixI,ifsuchoptionisexercisedbeforetheduedateforfurnishingthereturnof
incomeundersubsection(1)ofsection139oftheAct,
(a) for the assessment year 199899, in the case of an undertaking which began to generate power
priorto1stdayofApril,1997and
(b) fortheassessmentyearrelevanttothepreviousyearinwhichitbeginstogeneratepower,incase
ofanyotherundertaking:
Provided also that any such option once exercised shall be final and shall apply to all the subsequent
assessmentyears.]
(2)Whereanynewmachineryorplantisinstalledduringthepreviousyearrelevanttotheassessmentyear
commencing on or after the 1st day of April, 1988, for the purposes of business of manufacture or
productionofanyarticleorthingandsucharticleorthing
(a) ismanufacturedorproducedbyusinganytechnology(includinganyprocess)orotherknowhow
developedin,or
(b) isanarticleorthinginventedin,
alaboratoryownedorfinancedbytheGovernmentoralaboratoryownedbyapublicsectorcompanyora
University or an institution recognised in this behalf by the Secretary, Department of Scientific and
IndustrialResearch,GovernmentofIndia,
suchplantormachineryshallbetreatedasapartofblockofassetsqualifyingfordepreciationattherateof
90[40]percentofwrittendownvalue,ifthefollowingconditionsarefulfilled,namely:

(i) therighttousesuchtechnology(includinganyprocess)orotherknowhowortomanufactureor
producesucharticleorthinghasbeenacquiredfromtheownerofsuchlaboratoryoranyperson
derivingtitlefromsuchowner
(ii) thereturnfurnishedbytheassesseeforhisincome,ortheincomeofanyotherpersoninrespectof
which he is assessable, for any previous year in which the said machinery or plant is acquired,
shallbeaccompaniedbya91certificatefromtheSecretary,DepartmentofScientificandIndustrial
Research,GovernmentofIndia,totheeffectthatsucharticleorthingismanufacturedorproduced
byusingsuchtechnology(includinganyprocess)orotherknowhowdevelopedinsuchlaboratory
orisanarticleorthinginventedinsuchlaboratoryand
(iii) themachineryorplantisnotusedforthepurposeofbusinessofmanufactureorproductionofany
articleorthingspecifiedinthelistintheEleventhScheduletotheAct.
Explanation:Forthepurposesofthissubrule,
(a) laboratory financed by the Government means a laboratory owned by any body [including a
societyregisteredundertheSocietiesRegistrationAct,1860(21of1860)],andfinancedwhollyor
mainlybytheGovernment
(b) public sector company means any corporation established by or under any Central, State or
ProvincialActoraGovernmentcompany92asdefinedinsection617oftheCompaniesAct,1956
(1of1956)and
(c) University means a University established or incorporated by or under a Central, State or
Provincial Act and includes an institution declared under section 3 of the University Grants
CommissionAct,1956(3of1956),tobeaUniversityforthepurposesofthatAct.]