Depreciation post application of sec 44ad

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A firm had been filling its return under sec44 AD & AE... it has been showing fixed assets at its purchase price(100000) and no depreciation was charged to P\L Account.

This year, it has gross reciepts of around 2 crores.. so its accounts need to be get audited...

do I need to show dep on 100000, considering this as the wdv or need to calculate dep for previous years as well???

If I charge dep for previous years as well,then won't it understate the net profit of this year...???

Kindly reply... Thanx in advance...

 

Replies (3)

As per provision of 44AD, any deduction allowable under theprovisions of sec 30 to 38 shall deemed to have been already given full effect. So Depreciation(Sec. 32) deemed to have been already given full effect. u ve to provide for depreciation after deducting first year depreciation.

sure na....

100000 @ 15% dep needs to be charged this year..

As per the Sec 44AD, even if you are going by presumptive basis calculations deductions allowed under provisions of sec 30 to 38 (i.e including depreciation)  shall be deemed to have been already allowed and  no further deduction under those sections shall be allowed. &  The written down value of any asset  shall be deemed to have been calculated as if the eligible assessee had claimed and had been actually allowed the deduction in respect of the depreciation for each of the relevant assessment years.

 

So you need to calculate the depreciation on the WDV only and not  on the purchase price.

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