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DEPRECIATION ON PREVIOUSLY REVALUED ASSETS

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ca.r.harirao

partner

35 Points Posted on 14 May 2011

DEAR TAX EXPERTS,

I WISH TO KNOW THE TAXABILITY OF DEPRECIATION IN THE FOLLOWING CASE'

FACT.

A PARTNERSHIP FIRM REVALUED ITS FIXED ASSETS FROM 2 CRORE TO 20 CRORES (BASED ON THE VALUATION REPLACEMENT COST OF ITS OLD PLANT &ACHINERY BY THE EXPERTS)

THEBOOK VALUE OF ASSETS ARE INCREASED WITH CORRESPONDING CREDIT IN PARTNERS CAPIAL ACCOUNTS.AS ON 31.03.2010

SUBSEQUENTLY PARTNERSHIP FIRM WAS CONVWERTED IN TO PRIVATE LIMITED BY VIRTUE OF PART IX CONVERSION

QUESTION.

.CAN THE PRIVATE COMPANY CLAIM DEPRECIATION ON REVALUED VALUE OF ASSETS FOR INCOME TAX PURPOSES. IS THERE ANY CASE LAW IN SUPPORT OF ABOVE

Replies (1)

U S Sharma

glidor@gmail.com

21068 Points Posted on 14 May 2011

on the date of revaluation if the liability of taxes are discharged by firm, then there is no bar to claim depreciation at enhanced new value.

as mentioned , the firm has been been converted into pvt ltd, so the fixed assets schedule at the time of transfer is to be taken in account, and to be worked accordingly,

however the fact to be considred that revaluation is done and subsequent rise in profit with tax payment must be satisfied in this case.,