Calculation of unabsorbed depreciation
This query is : Open
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.
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.
Message likes :
4 times
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.
Further if total loss is rs. 100 after claiming of depreciation of rs. 120 then unabsorbed depreciation will be rs. 100.
Message likes :
1 times
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?
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?
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