Depreciation

Respected to all

 

Sir/Madam

 

I have a query about Depreciation ( one of our client not providing depreciation as per company act he is charging dep as per IT act in the books of accounts, in the F.Y 2012-13 fire occured on 13 oct 2012 and all fixed assets destroyed and having Nil book value, On   1-4-2012 WDV is 250 cror and after 13 oct value becomes NIL, now the question arises what the depreciation is to be charges for 6 month or full year and what is the treatment of remaining assets value after chaging depreciation in bookd of accounts , what is the impact on incoe tax while preparing ITR for the F.Y 2012-13 and pls kind note that company is providing DEP as per IT ACT not As PER COMpany ACT.

 

I hope u undersytand the Query plssend ur feedback and make me oblidge

Replies (1)

depreciation is charged on closing WDV of block of assets

closing WDV=op WDV+purchases during the year-money payable for assest sold/destroyed during the year

but since all assets are detroyed by fire and WDV is nil hence no question of depreciation in FY 2012-13

but in your case Sec 50 will be attracted giving rise to STCG

STCG=Sale consideration(i.e insurance compensation)-op WDV-Purchases during the year-expenditure incurred in connection to transfer during the year

hope my reply is answered satisfactorily

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