Dear Sir,
We purchase Air Conditions of Rs. 7,00,000/- in the FY20-21 and charged depreciation on it for the FY20-21 & FY21-22.
And in the FY22-23 we received a credit note of Rs. 3,00,000/- from the vendor.
We decreased the assets value from Rs. 3,00,000/-.
Please suggest the treatment of Depreciation(As per Company Act & Income Tax Act).
The depreciation will be calculated on reduced value under both the acts
How did you receive a credit note of that amount? Anyways, you have to change your policy to revaluation method from cost method and depreciate accordingly.
Eg purchased
Dr. Asset 100
Cr. Bank 100
And after 2 year depreciation
Dr. Depreciation 20
Cr asset 20
Now you received a credit note 30 saying we sold bad quality
Dr. Bank 30
Cr. Asset 30
Everything tallied so far!!
Or we use retrospective changes here. Adjusting WDA is the same in both the methods because you have to claim. I don't know the claiming method. Put your query on tax section
My topic about excess depreciation is correct. So you need a tax perspective not accounting.
Now retrospective changes. It nalso has extra depreciation because you have already filed a claim on TAD.
CAclubindia
