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Depreciation as per Companies Act

Ankur Baheti (Article) (25 Points)

23 May 2010

Our client being a Pvt. Ltd. Co.has purchased textile machine of worth Rs.35 Lacs on 08.06.2009 & same put to use on 01.07.2009.Later on received Tuf subsidy on the above machinery of Rs.6 lacs on 12.01.2010.

Now our query is (i) What will be treatment of the above transactions in books of A/c & (ii) How much Depreciation will be recorded in Books as per Companies Act as well as as per I.T.Act.

Please reply urgently.

Thanks in Advance.

Ankur Baheti

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1 Replies

santhosh (CA) (636 Points)
Replied 23 May 2010

The receipt of Subsidy is to be given effect as per AS-12. For IT also you must reduce it from cost of acq.

For companies act you charge depreciation for the number of days used as per rates prescribed in sch XIV. For IT you can claim normal and additional depreciation for the asset. If asset is put to use less than 180 days in the year .,then 50% of normal and additional depreciation can be claimed.