Question

Which is the method that is not being recognized by the Income tax department as a depreciation method to be used by an enterprise?

• A. Fixed installment method.
• B. Straight line method.
• C. Written down value method.
• D. Depreciation and replacement of assets.

Answer 1

The correct option is D Depreciation and replacement of assets.

Only two methods are recognized as per Income Tax Act, 1961.:

1. Written Down Value (Block wise)

2. Straight Line method ( for power generating units)

Hence, only those methods which are recognized by the Act shall be used to compute the total income chargeable to tax, to arrive at the total tax payable by an entity.