AIBE XVI — October 2021 — Q.64 (Income Tax Act, 1961)

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Q.64

Taxation Law Medium Act + Section Given

Bare Act Income Tax Act, 1961 · Section 32(1)(iia)

Rate of additional Depreciation will be under section 32- Indian Income Tax Act-

A 10 %

✓ 20 % Answer

C 15 %

D 30 %

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Explanation & Strategy

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Additional depreciation under Section 32(1)(iia) of the Income Tax Act allows manufacturing companies to claim 20% additional depreciation on new plant and machinery (over and above normal depreciation). This incentivizes capital investment in manufacturing.

1 Pick up IT Act.
2 Go to Section 32(1)(iia).
3 Read: additional depreciation = 20% of actual cost of new machinery.

At a Glance

Subject Taxation Law

Difficulty Medium

Act Income Tax Act, 1961

Section Section 32(1)(iia)

Answer (B) Act + Section Given

Paper AIBE XVI — October 2021

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