Written Down Value for Income Tax Purposes

Charge of Depreciation:- Section-32(1)(ii)

• Depreciation shall be allowed on both tangible as well as intangible assets;
• But asset should be used for the purpose of business or profession;
• Such asset may be owned wholly or partly by the assessee- It means that ownership is must for claiming depreciation. A tenant cannot claim depreciation on a rented asset.
• Depreciation shall be calculated on written down value (WDV) of block of assets;
• Depreciation = WDV of block * prescribed rate

Meaning of Written Down Value:- Section-43(6)

W.D.V. of asset in simple words is the actual cost of the asset less depreciation charged on the asset since the asset is put to use.

For calculation purposes, WDV for the purpose of depreciation =

W.D.V. of the block of assets at the beginning of the previous year        

Add: Actual cost of the assets acquired during the previous year (falling under block)       

Less: Money payable in respect of asset falling in the block which is sold, discarded                 Demolished or destroyed during previous year + scrap value

(However, such deduction shall not exceed the WDV of the block + Actual cost

 As above)- It means that Block value cannot be negative.

Less: Actual cost of the assets falling in the block transferred by way of slump sale u/s      50B as reduced by depreciation that would have been allowable as if the asset was the only asset in the block of assets, from the date asset was acquired and Put to use