Section 19 : Depreciation deduction expenses

1) For purposes of computing the income earned by any person from any business or investment in any income year, such person shall deduct depreciation pursuant to Schedule II in lieu of depreciation of the depreciable properties owned and used by that person in that year in making income from that business or investment.

2) Notwithstanding anything contained in sub-section (1), the following provisions shall be applicable in respect of the deduction for depreciation of the devices, equipment and other machineries installed by any entity in the projects which involve the construction and operation of public infrastructures and are transferred to Government of Nepal and in the projects on construction of powerhouses and generation and transmission of electricity:-

a) If the devices, equipment and other machineries installed previously become obsolete because of being old or worn and torn and new devices, equipment and other machineries have to be installed in lieu thereof, the value which remains by subtracting depreciation deduction until the income year from the cost of the property, which has become obsolete property because of being old or worn and torn, installed previously in that income year in which they were so installed may be deducted as expenses.

b) In respect of properties other than the old properties replaced pursuant to clause (a), if any value remains by subtracting depreciation deduction until the income year when a transfer takes place from the cost of those properties at the time when the entity transfers such a project to Government of Nepal, the entity may deduct such a remaining value as expenses.