Assets and Depreciation Chapter- 10
The depreciable asset includes building, plant and machinery, furniture and fixtures, computer
hardware, technical books, vehicles, air-craft, ships, below ground installation, offshore platforms and
production installation in mineral oil concerns.
Structural Improvement
Structural improvement in relation to immovable property includes any building, road, driveway, car
park, railway line, pipeline, bridge, tunnel, airport runway, canal, dock, wharf, retaining wall, fence,
power lines, water or sewerage pipes, drainage, landscaping or dam.
Provided that where a depreciable asset is jointly owned by a taxpayer and an Islamic financial
institution licensed by the State Bank of Pakistan or Securities and Exchange Commission of
Pakistan, as the case may be, pursuant to an arrangement of Musharika financing or diminishing
Musharika financing, the depreciable asset shall be treated to be wholly owned by the taxpayer.- Eligible Depreciable asset [U/s 23(5)]
All depreciable assets are eligible depreciable assets except following:
(a) Any road transport vehicle not plying for hire. (Trains and busses are example of vehicles
plying for hire.)
(b) Furniture and fittings
(c) Any plant and machinery that has been previously used in Pakistan
(d) Any asset whose total cost has already been allowed as deduction in the tax year in which it is
acquired
Particulars to be furnished to claim depreciation / amortisation [Rule 12]
An allowance for depreciation and amortization shall be allowed u/s 22, 23 and 24 on furnishing to
CIR the following particulars and information with the return of income for the tax year:
Description of each depreciable asset and intangible.
The extent of part used for business
In case of acquisition during the tax year, the date of acquisition
The tax WDV of each asset at beginning of tax year
The amount of capital expenditure incurred on addition, alteration, improvement and extensions
Total value of each asset on which depreciation is allowable
WDV at beginning add: capital expenditure during tax year less: initial deprecation allowed,
rates and amount of initial and normal depreciation stating separately, normal useful life for
each intangible, total depreciation or amortization allowed for tax year
WDV of each depreciable asset and the cost of asset or its remaining useful life. and
On disposal of asset the sale proceed of the asset disposed of with WDV at beginning of tax
year and the excess or deficit on disposal.
Practically there is a separate annexure for furnishing of above information that is filed along-with
the return of income.- Conditions for leasing companies for claim of depreciation deduction [U/R 224]
The following conditions shall be fulfilled by a leasing company or a modaraba to claim deduction for
depreciation on lease of depreciable assets;-
(i) The leasing company is engaged principally in the business of leasing of assets and has been
issued a licence by the SECP to operate under the terms and conditions specified therein; and
(ii) the leasing company or a modaraba doing leasing business undertakes that where a motor
vehicle is given on lease, the purchase value thereof shall be restricted to the amount specified
in the 3rd Schedule to the Ordinance, for the purposes of claiming depreciation or the
expenditure on such lease.