Assets and Depreciation Chapter- 10
- First year allowance [U/s 23A]
Omitted by Finance Act, 2021.- Accelerated depreciation to alternate energy projects [23B and Part-II of Third Schedule]
Any plant, machinery and equipment installed for generation of alternate energy by an industrial
undertaking set up anywhere in Pakistan and owned and managed by a company shall be allowed
first year allowance in lieu of initial allowance u/s 23, at the rate of 90% against the cost of the
eligible depreciable assets put to use after July 01, 2009.
A deduction allowed to a leasing company or an investment bank or a modaraba or a scheduled
bank or a development finance institution in respect of assets owned and leased to another
person shall be deducted only against the leased rental income derived in respect of such assets.
"eligible depreciable asset" means a depreciable asset other than -
(a) any road transport vehicle unless the vehicle is plying for hire;
(b) any furniture, including fittings;
(c) any plant or machinery that has been used previously in Pakistan;
(d) any plant or machinery that has been allowed as deduction under another section for the entire
cost of the asset. or
(e) immovable property or structural improvement to the immovable property.Important note: It is worthwhile to mention here that under this section there is no concept of number
of days because either the accelerated depreciation shall be allowed or not allowed.Chart presentation of initial allowance, First year allowance & accelerated depreciation to alternate
energy projects:- Intangibles [U/s 24]
Introduction:
The nomenclature of this term gives the impression that it only includes the cost of non-physical
assets. However, definition of this term under the tax law is far wider than this general impression.
The definition of intangible in section 24 of the Ordinance is as under:
"intangible" means any patent, invention, design or model, secret formula or process, copyright,
trade mark, scientific or technical knowledge, computer software, motion picture film, export quotas,
franchise, licence, intellectual property, or other like property or right, contractual rights and any
expenditure that provides an advantage or benefit for a period of more than one year (other than
expenditure incurred to acquire a depreciable asset or unimproved land) but shall not include self-
generated goodwill or any adjustment arising on account of accounting treatment in the manner as
may be prescribed.The above definition reveals that it also includes any expenditure that provides an advantage or
benefit for a period of more than one year. Therefore, amortization of any cost which has useful life of
a period exceeding on year is allowed.
Intangible eligible for amortization A person shall be allowed an amortisation deduction in a tax year for the cost of the person's
intangibles; that are wholly or partly used by the person in the tax year in deriving income from
business chargeable to tax and that has a normal useful life exceeding one year.