Increase depr. due to revision of useful life of fixed Asst.

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

07 January 2010 Dear Sir,

Please confirm whether increased (additional)depreciation due to revision of useful life of fixed assets can be deducted from book profit to arrive at the profit for computation of MAT liability.It's urgent.

Thanks & Regards,
Amar Kant

CA. Varun Goel

CA. Varun Goel (Expert)

07 January 2010 Depreciation changes due to Revision of useful life of fixed asset is a change in accounting estimete instead of revaluation of asset.
So in my opinion it should be deducted from book profit for the purpose of calculating MAT liabilty.

CMA. Dinesh S Adhikari, ACMA

CMA. Dinesh S Adhikari, ACMA (Expert)

07 January 2010 Agreed with Mr. Varun that there is only change in the useful life of the asset but not in the change in the value of the Asset.

So, Total depreciation will be equal to amount spent on the Acquisition of the asset, which can be claim according to depreciation.

However, Depreciation rates are available under sec 32(Income Tax Rules, 1961)are different from Company Act depreciation rate. So, compute your depreciation amount according to sec 32.

Regards!!!
Dinesh S. Adhikari

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