I have the following problem:-
An individual concern has two assets under 15% Dep. rate category. A scooter with WDV of Rs. 1500 and a moped with WDV of Rs. 500. Now the moped is sold during the year for Rs. 800. For tax purpose, dep. will now be provided on Rs. 1200 @ 15%. But how we will show this in our books of accounts and IT Return. The proprietor has charged dep. on WDV of scooter is Rs. 1500 and recorded profit of Rs. 300 on the sale of moped.
Pls guide me.
As per Accounting books :
Bank a/c Dr. 800.00
To Moped 500.00
To P&L 300.00
As per IT :
The entire block value will be 2000
Less : Asset sold 800
Show the Closing Block WDV at 1200
So profit will differ in both the cases.
YES THE PROFIT WILL DIFFER . IT WILL BE ADJUSTED AS PER IT RUES WHILE CALCULATING PGBP
The profit is not taxable under "Capital Gain" as the block of 15% is not ceased.
The Depreciation on Rs.1500 (scooter's depreciation in p&L A/c) will be disallowed while computing the Profit as per IT and Depreciation on net block (ie [(1500+500)-800]*15% will be allowed as depreciation to arrive at the income chargable under PGBP.
CAclubindia
