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37. Determination of capital allowances
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37. Determination of capital allowances.—(1) The amount of capital allowances referred to in clause (c) of sub-section (1) of section 34 shall be the aggregate of the amount in respect of,—
(a) depreciation of business capital assets ;
(b) initial depreciation of business capital assets ;
(c) terminal allowance ;
(d) scientific research and development allowance ;
(e) deferred revenue expenditure allowance ;
(f) deduction of an amount in accordance with such deposit scheme in respect of the person carrying on business of growing and manufacturing tea or coffee or rubber in India, as may be prescribed.
(2) The depreciation, initial depreciation or terminal allowance, referred to in sub-section (1), shall be allowed in respect of any business capital asset if the asset is,—
(a) owned, wholly or partly, by the person ; and
(b) used for the purposes of the business of the person.
(3) The condition referred to in clause (a) of sub-section (2) shall not apply in the case of a business capital asset being a capital expenditure on any building which is held by the person under a lease or other right of occupancy.
(4) A business capital asset shall be deemed to be owned by the person if he is a lessee in terms of a financial lease.
(5) The amount of deferred revenue expenditure allowance referred to in clause (e) of sub-section (1) shall be such amount as computed in accordance with the Twenty-second Schedule.
Clause 37 provides for the determination of capital allowances in relation to business expenditure which shall be the aggregate of the operative expenditure, finance charges and capital allowances. The said clause seeks to provide that the amount of capital allowances shall be the aggregate of the amount in respect of depreciation of business capital assets, initial depreciation of business capital assets, terminal allowance, scientific research and development allowance and deferred revenue expenditure allowance.
The said clause further provides that the depreciation, initial depreciation or terminal allowance shall be allowed in respect of any business capital asset if the asset is owned, wholly or partly, by the person, and used for the purposes of the business of the person. However, the condition of ownership, whether whole or in part, shall not apply in the case of a business capital asset being a capital expenditure on any building which is held by the person under a lease or other right of occupancy. A business capital asset shall be deemed to be owned by the person if he is a lessee in terms of a financial lease.
The said clause also provides that the amount of deferred revenue expenditure allowance referred to above shall be as specified and computed in accordance with the Twenty-second Schedule.
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