Sir,
I am An Accountant in the firm. at present the firm has purchased plant & machine appx. 1.5 crore
if firm takes depreciation on fixed assets then balance sheet shown loss
can u tell me taking depreciation is compulsory as per income tax rules or not
you can carry Dep which can not be absorbed during the current year as unabsorbed depreciation and set off in the year which has sufficient profits
HI DEAR,
AS FAR AS INCOME TAX IS CONCERNED, U HAVE TO CHARGE DEPRECIATION IRRESPECTIVE OF WHETHER THE DIVIDEND DECLARED OR NOT. SEC 32 PROVIDES FOR THAT.
HOWEVER, AS PER COMPANIES ACT, THERE IS NO SPECIFIC PROVISION THAT PROVIDES FOR COMPLUSORY CHARGING OF DEPRECIATION. HOWEVER, IMPLIED MEANING OF THE COMPANIES ACT, 1956 WOULD PROVIDE THAT FINANCIAL STATEMENTS WOULD NOT REFLECT THE TRUES AND FAIR VIEW OF STATE OF AFFAIRS AND OPERATING RESULTS OF THE COMAPNY, IF THE CHARGE FOR DEPRECIATION HAS NOT BEEN GIVEN. COMPANIES ACT MAKES IT MANDATORY TO PROVIDE FOR DEPRECIATION BEFORE DECLARING DIVIDEND. THUS, IF COMPANIES DOESN'T DECLARE DIVIDEND, COMPANIES ACT DOESN'T PROVIDE FOR CHARGING OR NON CHARGING OF DEPRECIATION.
REGARDS,
MANOJ
Yes Depriciation should be taken & It is carry forward & set off as Unabsorbed Dep in any no of years
@ shafiq
Yes , as per explanation 5 of section 32(1) it is mandatory to claim depreciation.
yes depreciation is mandatory under the law . u cant go without claiming depreciation
depriciation is compulsory
CAclubindia
