Friends, Block os assets is important when we are going to charge depreciation on assets. Detail of the same is given below :-
"Block of assets"[Section 2(11)] means a group of assets forming within a class of assets comprising,
(a) tangible assets, being buildings, machinery, plant or furniture;
(b) intangible assets, being know-how, patents, copyrights, trademarks,licences, franchises or any other business or commercial rights of similar nature, in respect of which the same percentage of depreciation is prescribed.
Class of Assets
Assets eligible for depreciation have been classified into four classes i.e.-
(a) building;
(b) plant & machinery;
(c) furniture;
(d) intangible assets of the type discussed above.
Each class of assets other than intangible assets may have different blocks or groups on which separate rates of depreciation are prescribed and for each such rate, separate block will be formed.In the case of intangible assets there will be only one block as only one rate i.e. 25% has been prescribed for all such intangible assets.
The following blocks can be formed on the basis of class of assets and rates of depreciation:-
(a) Buildings
Block 1 Buildings which are used mainly for residential purposes 5%
except hotels and boarding houses
Block 2 Buildings other than those used mainly for residential purposes 10%
and not covered by sub-items(1) above and (3) below
Block 3 (i) Buildings for installing machinery and plant forming part of water 100%
supply project or water treatment system and which is put to use
for the purposes of business of providing infrastructure facilities
under section 89-1A(4)(i)
(ii) purely temporary erection such as wooden structures
(b) Furniture and fittings
Block 1 Furniture and fittings including electrical fitting. 10%
(c) Machinery and plant
Block 1 Motor cars, other than those used in a business of running 15%
them on hire.
Machinery and plant other than those covered by block nos.
2 to 8 below
Block 2 Ships;
(i) Ocean-going ships including dredgers, tugs, barges, survey 20%
launches and other similar ships used mainly for dredging purposes
and fishing vessels with wooden hull.
(ii) Vessels ordinarily operating on inland waters, not covered by
sub-item (c) below.
(iii) Vessels ordinarily operating on inland waters being speed boats
Block 3
(i) Motor buses, motor lorries and motor taxis used in a business of 30%
running them on hire
(ii) Moulds used in rubber and plastic goods factories 30%
(iii) Machinery and plant, used in semi-conductor industry covering all 30%
integrated circuits (ICs) (excluding hybrid integrated circuits) ranging
from small scale integration (SSI) to large scale integration/very large
scale integration (LSI/VLSI) as also discrete semi-conductor devices
such as diodes, transistors, thyristors, triacs. etc. ) other than those
entitled to 80% rate of depreciation given in bloc 7 below.
Block 4
(i) Aeroplanes- Aeroengines 40%
(ii) Commercial vehicle which is acquired by the assessee on or after 40%
1.10.1998, but before 1.4.99 and is put to use for any period before
1.4.1999 for the purposes of business or profession.
Block 5
(i) Containers made of glass or plastic used as re-fills. 50%
(ii) new commercial vehicle which is acquired on or after 1.1.2009 but 50%
before 1.10.2009 and is put to use before 1.10.2009 for the purposes
of business or profession.
Block 6
(i) Computers including computer software 60%
(ii) Books, (other than books, (a) being annual publications, or (b) books 60%
owned by assesses carrying on business in running lending libraries
(iii) Gas cyclinders including valves and regulators. Direct fire glass melting 60%
furnaces used in Glass manufacturing concerns, Plant used in field
operation (above ground) distribution, and Plant used in field operations
(below ground), but not including kerbside pumps including underground
tanks and fittings used in field operation (distribution) by mineral oil concerns.
Block 7 Rollers used in Flour mills, Rolling mill rolls used in Iron and steel 80%
industry, Rollers used in suger works, Energy saving devices, and
Renewal energy devices.
Block 8 (i) Machinery and plant, acquired and installed in a water supply project 100%
or a water treatment system and which is put to use for the purpose of
business of providing infrastructure facility under section 80-IA(4)(i).
(ii) Wooden parts used in artificial silk manufacturing machinery. 100%
(iii) Cinematograph films - bulbs of studio lights. 100%
(iv) Match factories- Wooden match frames. 100%
(v) Tubs, winding ropes, haulage ropes and sand slowing pipes, and 100%
Safety lamps used in Mines and quarries.
(vi) Salt works- Salt pans, reservoirs and condensers, etc., made of 100%
earthy sandy or clayey material or any other similar material.
(vii) Books owned by assessees carrying on a profession, being annual 100%
publications.
(viii) Books owned by assessees carrying on business in running lending 100%
libraries.
(ix) Air pollution control equipment, Water pollution control equipment, 100%
Solid waste control equipments, Solid waste recycling and resource
recovery systems.
1. Machinery and plant includes pipes needed for delivery from the source of supply of raw
water to the plant and from the plant to the storage facility.
2. Plant shall not include building, furniture and fittings and as such the building, electrical
fittings etc. cannot be treated as plant.
(d) Intangible Assets.
Block 1 Know-how, patents, copyrights, trademarks, licences, franchises or 25%
any other business or commercial rights of similar nature.
(a) buildings - 3 block (5%,10% and 100%).
(b) furniture & fittings - 1 block (10%)
(c) plant and machinery - 8 blocks (15%,20%,30%,40%,50%,60%,80% and 100%)
(d) intangible assets. - 1 block (25%)
Block 1 Furniture and fittings including electrical fitting. 10%
(c) Machinery and plant
Block 1 Motor cars, other than those used in a business of running 15%
them on hire.
Machinery and plant other than those covered by block nos.
2 to 8 below
Block 2 Ships;
(i) Ocean-going ships including dredgers, tugs, barges, survey 20%
launches and other similar ships used mainly for dredging purposes
and fishing vessels with wooden hull.
(ii) Vessels ordinarily operating on inland waters, not covered by
sub-item (c) below.
(iii) Vessels ordinarily operating on inland waters being speed boats
Block 3
(i) Motor buses, motor lorries and motor taxis used in a business of 30%
running them on hire
(ii) Moulds used in rubber and plastic goods factories 30%
(iii) Machinery and plant, used in semi-conductor industry covering all 30%
integrated circuits (ICs) (excluding hybrid integrated circuits) ranging
from small scale integration (SSI) to large scale integration/very large
scale integration (LSI/VLSI) as also discrete semi-conductor devices
such as diodes, transistors, thyristors, triacs. etc. ) other than those
entitled to 80% rate of depreciation given in bloc 7 below.
Block 4
(i) Aeroplanes- Aeroengines 40%
(ii) Commercial vehicle which is acquired by the assessee on or after 40%
1.10.1998, but before 1.4.99 and is put to use for any period before
1.4.1999 for the purposes of business or profession.
Block 5
(i) Containers made of glass or plastic used as re-fills. 50%
(ii) new commercial vehicle which is acquired on or after 1.1.2009 but 50%
before 1.10.2009 and is put to use before 1.10.2009 for the purposes
of business or profession.
Block 6
(i) Computers including computer software 60%
(ii) Books, (other than books, (a) being annual publications, or (b) books 60%
owned by assesses carrying on business in running lending libraries
(iii) Gas cyclinders including valves and regulators. Direct fire glass melting 60%
furnaces used in Glass manufacturing concerns, Plant used in field
operation (above ground) distribution, and Plant used in field operations
(below ground), but not including kerbside pumps including underground
tanks and fittings used in field operation (distribution) by mineral oil concerns.
Meaning of Computer Software is any computer programme recorded on any disc, tape perforated media or other information storage device.
Block 7 Rollers used in Flour mills, Rolling mill rolls used in Iron and steel 80%
industry, Rollers used in suger works, Energy saving devices, and
Renewal energy devices.
Block 8 (i) Machinery and plant, acquired and installed in a water supply project 100%
or a water treatment system and which is put to use for the purpose of
business of providing infrastructure facility under section 80-IA(4)(i).
(ii) Wooden parts used in artificial silk manufacturing machinery. 100%
(iii) Cinematograph films - bulbs of studio lights. 100%
(iv) Match factories- Wooden match frames. 100%
(v) Tubs, winding ropes, haulage ropes and sand slowing pipes, and 100%
Safety lamps used in Mines and quarries.
(vi) Salt works- Salt pans, reservoirs and condensers, etc., made of 100%
earthy sandy or clayey material or any other similar material.
(vii) Books owned by assessees carrying on a profession, being annual 100%
publications.
(viii) Books owned by assessees carrying on business in running lending 100%
libraries.
(ix) Air pollution control equipment, Water pollution control equipment, 100%
Solid waste control equipments, Solid waste recycling and resource
recovery systems.
1. Machinery and plant includes pipes needed for delivery from the source of supply of raw
water to the plant and from the plant to the storage facility.
2. Plant shall not include building, furniture and fittings and as such the building, electrical
fittings etc. cannot be treated as plant.
(d) Intangible Assets.
Block 1 Know-how, patents, copyrights, trademarks, licences, franchises or 25%
any other business or commercial rights of similar nature.
It may be observed that for the above four classes of assets, there can be 13 blocks of assets according to different rates of deprecation prescribed.
(a) buildings - 3 block (5%,10% and 100%).
(b) furniture & fittings - 1 block (10%)
(c) plant and machinery - 8 blocks (15%,20%,30%,40%,50%,60%,80% and 100%)
(d) intangible assets. - 1 block (25%)
How to form blocks :- Since building is one of the class of assets which has three rates of depreciation, there will be three blocks of buildings. All buildings owned by the assessee and used for business, carrying 5% depreciation will be grouped as Block-1. These will be residential buildings given to the employees of the assessee. All buildings owned by the assessee and used for business carrying 100% depreciation will be grouped under Block-II. Similarly, all buildings owned by the assessee and used for business carrying 100% depreciation will be grouped under Block -III.
Similar procedure will be followed for making blocks of plant and machinery. However, for intangible assets and furniture and fittings there will be only one block in each case.
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