Depreciation on Companies Incorporated under Companies Act

This query is : Resolved

Guest

Guest (Querist)

07 August 2009
Please let me know -

Is it necessary / mandatory for a company (whether public or private) to charge depreciation as per schedule XIV of the companies act, 1956 or it can charge depreciation as per section 32 of the Income Tax Act, 1961 in the Financial Statements ?

Kind Regards

Neha

CA.Tarun Maheshwari

CA.Tarun Maheshwari (Expert)
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07 August 2009 Yes, it is compulsory to charge depreciation according to Companies Act in case of a company in the books of accounts.

Ankur Garg

Ankur Garg (Expert)
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08 August 2009 Agree

Mr. Tarun is correct. Observation of schedule XIV is necessary.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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08 August 2009 The rates contained in schedule XIV should be viewed as the minimum rates. However, if on the basis of bona fide technological evaluation,higher rates of depreciation are justified, they may be provided with proper disclosure by way of note forming part of annual accounts.

Ref:- 1)Circular no 2 of 1989 dated 07/3/1989.
2)Note no 5(ii) to schedule XIV.

In view of the above Schedule XIV rates are not mandatory.

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Guest

Guest (Querist)

18 August 2009 With kind respect due to the divergent views given by esteemed experts, I ma not very clear that ::

Whether charging rates of depreciation as per compananies act is MANDATORY or company can follow rates prescribed by the income tax act ?