gee.balajie (Manager - Finance & Accounts) (53 Points)
09 September 2009plz suggest as to how depreciation shall be treated in the company books when such deprn(as per companies act) is lesser than that calculated under IT Act,196. Hence which amount should be allowed for tax purposes.
Manmohan ACA, CS
(Chartered Accountant )
(14243 Points)
Replied 09 September 2009
For tax purpose Income tax depreciation shall be allowed
In Acouting it should be deferred assets
CA Naveen Kumar Mittal
(Service)
(29 Points)
Replied 11 November 2009
as par company act the calculted of deprication
CA Rahul Jain
(CA)
(1162 Points)
Replied 11 November 2009
In the books of the company, Depreciation has to be charged as per the companies act. as far as accounting is concerned, it does not matter whether such depreciation is less or more than that of income tax.
While computing the taxable income, we shall add back the depreciation to the book profit and deduct the depreciation calculated under income tax act. Hence depreciation under IT Act is relevant for taxation purpose.
The difference between the tax payable on book profit and acutal tax paid is taken to the deferred assets/liabilites, as the case may be.
CAclubindia
