Calculation of unabsorbed depreciation

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Ankur

Ankur (Querist)
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03 January 2012 How to calculate unabsorbed depreciation?

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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03 January 2012 Unabsorbed depreciation means when the business profit is not sufficient to cover even depreciation expense.

Eg 1.
Business profit before depreciation Rs. 100 lakhs.
Depreciation Rs. 150 lakhs

In this case Rs. 50 lakhs is unabsorbed depreciation and NOT BUSINESS LOSS.

Eg 2.
Business loss before depreciation Rs. 150 lakhs
Depreciation Rs. 80 lakhs.

In this case, Rs. 150 lakhs is BUSINESS LOSS and Rs. 80 lakhs is UNABSORBED DEPRECIATION.

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CA Navin Jain

CA Navin Jain (Expert)
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03 January 2012 Suppose Total Loss is Rs. 100 after claiming of Depreciation of Rs. 20, then business loss will be rs. 80 and ubabsorbed depreciation will be rs. 100.

Further if total loss is rs. 100 after claiming of depreciation of rs. 120 then unabsorbed depreciation will be rs. 100.

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CA abhishek Jain

CA abhishek Jain (Expert)
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20 April 2019 Whether AO can challenge the view taken by assessee in the above two examples?

Eg 1. Business profit before depreciation Rs. 100 lakhs. Depreciation Rs. 150 lakhs, In this if AO argue that the remaining loss of 50 shall be business loss and not unabsorbed depreciation?

I agree that the remaining 50 shall be considered as unabsorbed depreciation, however what shall be the supporting? any case law or accounting principle?