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43A and depreciation

ankit goyal (CA Final Student) (102 Points)

12 September 2008

if i purchsed one asset say on 12th of december 2006 and due to 43 A i had a forex loss which needs to be capitalised as per 43 A on 15th october 2007 then whethr i would be calculating depreciation on forex loss on more than 6 months criteria or less than 6 months rate would be used

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CA Jonu Jain (Consultancy) (169 Points)
Replied 13 September 2008

Originally posted by :ankit goyal
"	hi if i purchsed one asset say on 12th of december 2006 and due to 43 A i had a forex loss which needs to be capitalised as per 43 A on 15th october 2007 then whethr i would be calculating depreciation on forex loss on more than 6 months criteria or less than 6 months rate would be used	"

Hi,
section 43A provides for that gain/loss due to exchange flutation at the tim eof payment need to be adjusted against the assets value if assets had been purchased by using foreign funds or from foriegn on credit basis.

section 32 provides for the depreciation and the depreciation is granted @ 50% if assets is put to use for a period of less tahn 180 days during the year of purchase.

In your case assets have already put to use and hence, the present case does not fall with in the scope of proviso. The depreciation shall be granted at full rate for the exchange fluctuation.

Hope this clarify.