Depreciation allowed under section 44ad or not?

Others 842 views 7 replies

Sir,

I opt for section 44ad in income tax then will i provide depreciation in balance sheet as per accounting principle or not.

 

Replies (7)

""then will i provide depreciation in balance sheet as per accounting principle or not.?""

Yes, you must allow.

But it will not be allowed to be deducted (additionally) from the presumed/declared profits u/s. 44AD. Its assumed to be already deducted from the declared profits.

means if my turnover is 50 lakh and i show profit of rs 5lakh the profit of rs 5 lakh is after depreciation if i assume depreciation is 20 thousand then my profit before depreciation is rs 5.20 lakh. I think As per this calculation incometax department will say me to pay tax on 5.2 lac because depreciation is not allowed under 44AD.

Kindly solve my problem.

" I think As per this calculation incometax department will say me to pay tax on 5.2 lac because depreciation is not allowed under 44AD. Kindly solve my problem."

Under section 44AD, when you have already declared profits 8% or more (for any eligible business), department cannot ask you for more tax (for the said business), nor ask for any books of accounts. Under the section it is presumed that the depreciation has already been adjusted in the declared profits.  And your WDV of assets has been reduced upto the effect of allowable depreciation under IT provision. 

Thank you sir

 

Sir I have an issue that if I deduct depreciation from my fixed asset and not allow as expenses in my balance sheet than my balance sheet will not match how can I match it

Please read first reply......... I repeat ''' Yes, you must allow.'''

Presumptive assessment statements here, differ with actual books.

Thanks sir


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