Depreciation calculation U/S 32

it should be at net value (less sales tax)

we have to consider net consideration received

Dear Shyam,

As per income Tax Act 1961, Depreciation is allowable on available asset which is in put to use in previous year....

If Fixed Asset sale during the previous year..... depreciation is not allowed as per section 32 of Income Tax Act.

In ur case is that:-

Cost of Fixed Asset for Purchaser is Gross (including Sales tax) for applying depreciation U/s 32

HI DEAR,

IF SHOULD BE AT NET VALEU ONLY.

REGARDS,

MANOJ

Originally posted by : Shyam Lodha
	While compution Depreciation U/S 32 of Income Tax Act what should be the tratment for Sale of Assets, whether is should be taken on Gross Value (Including Sales Tax) or Net Value (After Deducting Sales Tax), again if there is any case study on this please provide a reference of that also.

for computation of depreciation amount deductible is "money payable" which means gross amount received will be considered...and asset sold during the previous year is not eligible for depreciation hence deducted from the WDV at the begining of the year...!! ( Money payable term is used in context of the person who is making payment).

Since you have paid Sales Tax  you must be registered under Sales Tax. Now as per CAS 4 that portion of sales tax /VAT for which assessee wants to take credit does not form part of total cost of Fixed assets. This Principal can vary well apply to your case. Since you have sold the assets and collected the Tax to further deposit the same into o government account [obviously after adjusting credit available] the collected tax can not form part of  "Money payable' for the purpose of section 43(6) of the income tax act. 

Further Deduction of sales tax  is allowed only on actual payment under section 43B.

it should be at net value only