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Depreciation rejection

Tax queries 443 views 2 replies

Income Tax Wala: (Fin. Expert)

Chartered Accountants

2015 Points Joined August 2010

Dear friends

i have a query regarding Dep.

Assets purchased (15%) on 01/04/2012 Rs. 10000/-

Dep. Claim for 9 month i.e. Rs. 1125/-

Balance as on 31/12/2012 is 8875/-

Date of sale is 31/12/2012 for Rs. 8900

and file ITR with closing balane of assets is nil because all the assets have been sold.

but when processing the ITR u/s 143 (1) AO treatment is as follows

assets purchase Rs. 10000

Sale Rs. 8900

Balance 1100

Dep. on 1100/- @ 15% Rs. 165

Closing balance WDV 935/-

What to do in this case. how it can be rectified

Replies (2)

Income Tax Wala: (Fin. Expert)

Chartered Accountants

2015 Points Joined August 2010

any body to answer

CA Nimesh Maheshwari

Commercial Manager

334 Points Joined June 2011

Dear Tax Pandit, Please refer Section 50 (2) for your above sited case. In this case, the assessee will not be able to have the benefit of Depreciation. Thus: Opening WDV as on April 1, 2012 = Nil/- Additions during the year = 10,000/- Assets sold (Dec 31, 2012) = 8,900/- Closing WDV as on March 31, 2013 = Nil/- Short term capital loss = 1,100/- Return has been filed claiming wrong deduction of depreciation. You should go for revising the return. Hope this solves your query. Thanks.