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Querist : Anonymous

Querist : Anonymous (Querist)

04 September 2010 sir an assessee has bought tally software last year for Rs.20,000.
I have taken it as asset and claimed depreciation. Now to reduce profit I want to take this whole expense to P & L a/c. Is it compulsory to show it as asset?

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)

04 September 2010 you cannot follow every year one policy under income tax, unless the policy as per law

Querist : Anonymous

Querist : Anonymous (Querist)

05 September 2010 sir i didnt get ur answer..please elaborate the answer in detail

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)

05 September 2010 Profit need to be shown on true and fair view. for the purpose of reducing the profit you may write off the assest, it may satisfy your company policy, but as per law.Tommorow it may questioned by the A.O

Querist : Anonymous

Querist : Anonymous (Querist)

05 September 2010 means software (tally) Cannot be shown as an P & L item instead of showing asset? It is introduced in mid of the year.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)

05 September 2010 yes. use of Software is more than one accounting period, it need to be deffered and written off over the useful period or as per the depreciation allowed under income tax act. even you are debited fully in p&l while assessment only the depreciation allowed as deduction. unless you can justify to A.O the software cannot be used further

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