On a succession during a tax year, how does section 33(5) of the Income-tax Act, 2025 allocate depreciation on the transferred assets between the predecessor and the successor for that year?
Question and options
On a succession during a tax year, how does section 33(5) of the Income-tax Act, 2025 allocate depreciation on the transferred assets between the predecessor and the successor for that year?
In full to each of them, computed separately
Pro rata to the number of days each used the assets
In the ratio of the turnover each earned during the year
In full to whoever owns the assets at the end of the year
Answer and explanation
Section 33(5) of the Income-tax Act, 2025 caps the aggregate depreciation of predecessor and successor at the amount allowable had the succession not taken place, and allows it pro rata on the number of days each used the assets. Each cannot claim a full year's depreciation separately, and the owner at the year end does not take it all.
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