The correct answer is A. Depreciation on the tax component of capital goods and plant and machinery is permissible.
The tax component of capital goods and plant and machinery is the amount of tax paid on the purchase of the asset. This amount can be depreciated over the useful life of the asset. The depreciation amount is allowed as a deduction in the computation of taxable income.
Input tax credit (ITC) is the amount of tax paid on inputs used in the manufacture of goods or services. This amount can be claimed as a credit against the output tax liability.
The ITC on the tax component of capital goods and plant and machinery is not allowed. This is because the tax component is not an input used in the manufacture of goods or services.
However, the ITC on the remaining amount of the purchase price of the asset is allowed. This is because the remaining amount is an input used in the manufacture of goods or services.
The following are the options for the question:
A. Yes. Depreciation on the tax component of capital goods and plant and machinery is permissible.
B. No. Depreciation on the tax component of capital goods and plant and machinery is not permissible.
C. Input tax credit is eligible if depreciation on tax component is not availed.
D. None of the above.
Option A is the correct answer. Option B is incorrect because depreciation on the tax component of capital goods and plant and machinery is permissible. Option C is incorrect because the ITC on the tax component of capital goods and plant and machinery is not allowed. Option D is incorrect because one of the options is correct.