Depreciation

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kunal

kunal (Querist)
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29 December 2012 sir,
is depreciation mandatory under compaines act like in income tax act???

CA Manish

CA Manish (Expert)
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29 December 2012 Charging depreciation to P & L account is not mandatory as per companies act.

But before declaring dividend provision for depreciation must be taken into account (section 205)

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kunal

kunal (Querist)
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29 December 2012 sir if in a pvt ltd company asset is sold during the year.. and depreciation is not charged as per co. act.. (for saving tax liability) because as per income tax act we can not claim depreciation as it does not exist on 31st march..

what are the consequences ?? and no dividen is proposed during the year

CA Manish

CA Manish (Expert)
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29 December 2012 Your query is not clear. How can you save tax???????

kunal

kunal (Querist)
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29 December 2012 sir,
for example :-
NET BLOCK OF COMPUTER AS ON 1-4-2011 IS RS 100000
AND SOLD ON 30TH MARCH 2012

NOW AS PER CO. ACT WE CAN CLAIM DEPRECIATION ON THIS COMPUTER = 40%*100000*365/366 =39891

BUT WE CAN NOT CLAIM DEP. UNDER INCOME TAX ACT.. BECAUSE IT DOES NOT EXIST ON 31ST MARCH

AND IN COMPUTIN TAX LIABILITY
WE ADD DEP. AS PER CO. ACT IN GROSS TOTAL INCOME AND DEDUCT DEP AS PER INCOME TAX ACT ?
AND DEFFERED TAX ASSET REMAINS IN B/S..

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