Depreciation provision

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Pragnya

Pragnya (Querist)

04 December 2012 can you tell me that it is compulsory for a company to made a provision for depreciation ??

CA Manish

CA Manish (Expert)

04 December 2012 Sec 205 - Dividend to be paid only out of profits.

(1) No dividend shall be declared or paid by a company for any financial year except out of the profits of the company for that year arrived at after providing for depreciation in accordance with the provisions of sub-section (2) or out of the profits of the company for any previous financial year or years arrived at after providing for depreciation in accordance with those provisions and remaining undistributed or out of both or out of moneys provided by the Central Government or a State Government for the payment of dividend in pursuance of a guarantee given by that Government :

Provided that:

(a) if the company has not provided for depreciation for any previous financial year or years which falls or fall after the commencement of the Companies (Amendment) Act, 1960 (65 of 1960) it shall, before declaring or paying dividend for any financial year provide for such depreciation out of the profits of that financial year or out of the profits of any other previous financial year or years ;

Pragnya

Pragnya (Querist)

06 December 2012 thank you sir...
bt i want to know is it compulsory to made a provision of depreciation for a company as per any law irrespective of payment of dividend ???

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