Depreciation

This query is : Resolved

ahmeshere (Querist)
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06 December 2010 Are printers and UPS used alongwith computers to be classified as COMPUTERS for the purpose of depreciation under IT Act
or they are to be classified under Plant and Machinery?

Also can for the purpose of accounts, depreciation charged in the books of accounts be greater than the rates provided in Companies Act?

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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06 December 2010 Printers and UPS are to be shown as fixed assets under "COMPUTER".
Depreciation to be charges in accordance with rates given in companies act. You can charge depreciation at rates higher than provided in companies act.

ahmeshere

ahmeshere (Querist)
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06 December 2010 Mr. Sanjay,thank you very much for your immediate response
I am a paid assistant and my colleague argues that printers and ups should be treated under plant and machinery.
the higher rate of depreciation 60% is not applicable to printers and ups

Manmohan ACA, CS

Manmohan ACA, CS (Expert)
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06 December 2010 computers to be classified under Plant and Machinery for the purpose of depreciation under IT Act

for the purpose of accounts, depreciation charged in the books of accounts can be greater than the rates provided in Companies Act, as rate provided in CO's act are minimum rate at which depreciation should be provided.

ahmeshere

ahmeshere (Querist)
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06 December 2010 two different views i'm confused. Any other expert who would like to take part in the query nd further clarify

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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06 December 2010 It is stated that Schedule XIV clearly states that a company should disclose depreciation rates if they are different from the principal rates specified in the Schedule. On this basis, it is suggested that a company can charge depreciation at rates which are lower or higher than those specified in Schedule XIV.

It may be clarified that the rates as contained in Schedule XIV should be viewed as the minimum rates, and, therefore, a company shall not be permitted to charge depreciation at rates lower than those specified in the Schedule in relation to assets purchased after the date of applicability of the Schedule. However, if on the basis of a bona fide technological evaluation, higher rates of depreciation are justified, they may be provided with proper disclosure by way of a note forming part of annual account.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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06 December 2010 Further Rate of Depreciation on UPS & Printers as per IT act is 60%.(i.e. Rate of Depreciation on Computers) and as per companies Act is 40%.