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Unabsorbed depreciation in case of partnership firm

Raj (Student CA Final ) (25 Points)

30 July 2015

We have a partnership firm client which have Book profit of Rs.2,36,135 & after providing for Partners Remenuration amounting Rs 2,40,000 & Interest Rs 21,825 , there is loss of amount Rs25691. Firm has claimed depreciation of Rs 18,906. My question is that whether we can carry forward the depreciation as Unabsorbed depreciation in next assesement year. Plz repy!

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Z ( ) (2960 Points)
Replied 30 July 2015

Carry forward of depreciation ?

How have the remuneration and interest been calculated?

Explanation to S.40(b) For the purposes of this clause, "book-profit" means the net profit, as shown in the profit and loss account for the relevant previous year, computed in the manner laid down in Chapter IV-D as increased by the aggregate amount of the remuneration paid or payable to all the partners of the firm if such amount has been deducted while computing the net profit.

The above book profits are to be arrived after providing for the current year and carried forward depreciation.

S.40(b)

Disallowance of any payment of remuneration to any partner who is a working partner, which is authorised by, and is in accordance with, the terms of the partnership deed and relates to any period falling after the date of such partnership deed in so far as the amount of such payment to all the partners during the previous year exceeds the aggregate amount computed as hereunder :—

	(a)	on the first Rs. 3,00,000 of the book-profit or in case of a loss		Rs. 1,50,000 or at the rate of 90 per cent of the book-profit, whichever is more;
	(b)	on the balance of the book-profit		at the rate of 60 per cent :