Representing the garment exports industry of the country, Dr A Sakthivel, Chairman Apparel Exports Promotion Council (AEPC) recommended that this Budget should increase the rate of depreciation from the assessment year 2011-2012.
“In the 2005-06 Union Budget, depreciation on plant and machinery was reduced from 25 percent to 15 percent. This assumes a life span of nearly 25 years for such plant and machinery. However, machinery used in garment industry is susceptible for frequent technological changes. “Because of severe competition in export trade, it is very essential that the used machines are replaced by state-of-the-art machinery. The normal useful life considering obsolescence in garment industry is only four years. Under the circumstances, we request to enhance the depreciation rate from the 15 percent to previous level of 25 percent. Otherwise, at least for Garment Sector, the rate of depreciation may be fixed at 25 percent,” he stated.
With regards to capital gains, Dr Sakthivel recommended: “While computing capital gain on sale of immovable properties, value fixed by the state government for stamp duty purposes is adopted. This method is totally unscientific. Adoption of guideline value can be disputed by an assessee with a request to refer the valuation to Departmental Valuation Officer. There is no clear provision as to how this mechanism will work out at the time of filing the return since there is no provision in the electronic returns about such a request by an assesse. “Computing capital gain on the basis of notional guideline value in case of transfer for inadequate consideration results in undue hardship to such transfers for valid reasons. Valid and genuine transfer of property for inadequate consideration must be taken out of the purview of the provision of Section 50C.”