Dear Friends,
While preparing balance sheet of a Private Co., I have an Query
A Car was purchased few years ago(1/04/2001 to be specific) for Rs625836.80,now this year it has been sold
for Rs 155000.00.When I calculate depreciation as per Companies act it shows a loss.But while calculating Depreciation as per IT act,profit is arrived.
Any body please Suggest the Correct treatment of this entry.Should I show Loss in P/L Acc or Profit ???
Does Deferred Tax anything to do with it?????
You have to pass the entry as per companies act in the books of accounts. while calculating computation of total income this amount is anyway disallowed and only the depreciation as per IT is allowed as deduction. There you have to add back the loss as booked by you. hence the profit part will be taken care of in the depreciaton as per income tax act.
Yes the WDV as per the Income tax act and as per books has an effect on deferred tax.
You have to charge depreciation in the books at rates given in schedule IVX of the Co Act upto the date of sale and adjust the balance WDV against the Sale Consideration. The loss suffered is to be booked as Loss on Sale of Fixed Assets.
In computing the Taxable Income under the Income Tax, add back depreciation and loss on sale of asset to the Proft as per P&L a/c and adjust the Sale Proceeds to the Block of asset and calculate the depreciation as per Income Tax which will be claimable as depreciation allowable as per Income Tax Act. In case there is no other asset other than the one sold out then the Gain is taxable as a Short Term Capital Gain u/s 50 of the Income Tax Act.
Annie is Right
| Originally posted by :sumit agarwal | ||
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Dear Friends, no need to worry about the IT act |
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| Originally posted by :CA RAMESH KUMAR AHUJA | ||
| " | You have to charge depreciation in the books at rates given in schedule IVX of the Co Act upto the date of sale and adjust the balance WDV against the Sale Consideration. The loss suffered is to be booked as Loss on Sale of Fixed Assets. In computing the Taxable Income under the Income Tax, add back depreciation and loss on sale of asset to the Proft as per P&L a/c and adjust the Sale Proceeds to the Block of asset and calculate the depreciation as per Income Tax which will be claimable as depreciation allowable as per Income Tax Act. In case there is no other asset other than the one sold out then the Gain is taxable as a Short Term Capital Gain u/s 50 of the Income Tax Act. |
" |
| Originally posted by :CA RAMESH KUMAR AHUJA | ||
| " | You have to charge depreciation in the books at rates given in schedule IVX of the Co Act upto the date of sale and adjust the balance WDV against the Sale Consideration. The loss suffered is to be booked as Loss on Sale of Fixed Assets. In computing the Taxable Income under the Income Tax, add back depreciation and loss on sale of asset to the Proft as per P&L a/c and adjust the Sale Proceeds to the Block of asset and calculate the depreciation as per Income Tax which will be claimable as depreciation allowable as per Income Tax Act. In case there is no other asset other than the one sold out then the Gain is taxable as a Short Term Capital Gain u/s 50 of the Income Tax Act. |
" |
Sir,
It is possible that we sold the asset & depreciation charge on it as per Income Tax Act & as per Companies Act from 1st April 2008 to date of Sold or we can not charge any depreciation on that assets.
the way of calculating depreciation is different under income tax and companies act so thre will always be difference in the depreciation amount.
one has to understanddifference between Book Profit and Tax Profit,The treatment suggested by Priyadarshini is absolutely correct.
Dear All
I Want to know the mathod of Depreciation as per Company act & Income Tax, plz send me calculation if any on my e-mail address manish_garg001 @ yahoo.co.in
with regards
Manish Sharma
everones correct
CAclubindia
