Depreciation

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

14 September 2013 Dear Sir,

Kindly reply for the below query:-

I have to prepare balance sheet of a partner ship firm. There was no sale ( no business) during the year 2012-13. It has fixed assets. I understand depreciation will not be allowed by tax authority. Is it correct? If yes will I have to book depreciation ( based on IT rate as it is non corporate assessee) in balance sheet and to disallowed in computation of income.

Vijay Thadani

Vijay Thadani (Expert)
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14 September 2013 No sale does not mean there is no activity or the assets have not been put in to use. The depreciation is allowed under IT act if put into use. With respect to balance sheet you can claim depreciation and show book loss in the P&L A/c. The depreciation in the IT Act shall be as per specified rates under the Act, since there is no sale means u will have loss under IT Act which you can carry forward and set off against profits in subsequent years.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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14 September 2013 Dear Anonymous.

Pass the entries for depreciation at appropriate rates (income tax rates).

There is no need to disallow, the unabsorbed depreciation shall be carried forward to next year.

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