Dep. as per IT & Companies Act

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Kumar Gaurav

Going...to be C.A soon...

1055 Points Posted on 03 July 2010

Dear All

As we know we will charge depreciation in books as per companies act and also as per income tax act!

Pl. suggest me on the following example

Assets name say computer (dep rate say 60% as per companies act) & (dep rate say 40% as per income tax act)

Assets WDV say Rs. 50,000/-

if we booked dep. on 31st march' 2010: depreciation a/c Dr. 30K

Assets Cr. 30K

now assets balance ladger would remain by Rs. 20Kb

but income tax dept. will allow only Rs. 20k as depreciation claim then what is the accounting entry for Rs. 30k-20k=10k??

Thanks!

Replies (4)

Venkateswara Rao Sapare

Accountant

1341 Points Posted on 03 July 2010

Assets WDV say Rs. 50,000/-

if we booked dep. on 31st march' 2010: depreciation a/c Dr. 30K

Assets Cr. 30K

now assets balance ladger would remain by Rs. 20Kb”, Mr Kumar up to this point nothing is disputed.

What do you wish us to understand from your following lines :

“but income tax dept. will allow only Rs. 20k as depreciation claim then what is the accounting entry for Rs. 30k-20k=10k??”

Calculations of Depreciation as per Income Tax is carried on only for the computation of INCOME TAX RETURNS. Yourgoodself may be aware of this point that no entry regarding this (Calculations of Depreciation as per Income Tax ) will factor in the Books of Accounts.