Venkatesh (ERP Consultant) (36 Points)
21 December 2008Hi All,
I have added a New asset with value of 10000 rupees in the first half of the Financial Year 2007. In the same Financial year I retire the asset by selling it for 3000 rupees and the cost of removal is 500. How should i calculate the depreciation of the asset in this case? Let us assume that the asset is a computer so depreciation rate would be 60%.
Thanks in Advance,
Venkatesh
Sripada M
(CA)
(365 Points)
Replied 22 December 2008
I dont think Depreciation under Income Tax Act should be calculated.
According to IT act, depreciation has to be calculated on the closing balance of the asset, but in your case you are not having any asset as on the end of the financial year.
And also, depreciation is calculated for showing asset at its realisable value, but you have already realised the asset, so no need of calculating depreciation.
Correct me if i am wrong...
Hitesh Kothari
(Article)
(144 Points)
Replied 22 December 2008
Dear Venkatesh,
Please find the attached file, it will clarify the whole matter.
Regards
hitesh
M.Sriram Shenoy
(CA Final)
(814 Points)
Replied 22 December 2008
Mr.Venkatesh. As per Income Tax Act, depreciation shall be calculated and allowed on assets which are in the block on 31st march. Such block should be alive i-e contain assets as well as possess positive value. Only then you can claim depreciation.
In your case, depreciation shall not be allowed as the asset has ceased to exist as on 31st march of the year.
Venkatesh
(ERP Consultant)
(36 Points)
Replied 22 December 2008
Hi Hitesh,
I am not able to find any file attachment with you reply. Could you please check if you have forgotten the attachment.
For others,
Thank you very much for you inputs.
Thanks,
Venkatesh
Venkatesh
(ERP Consultant)
(36 Points)
Replied 22 December 2008
Hi All,
Could you guys also help me get clarified the below point as well.
Let us consider the same asset above, And I have an Opening WDV of 2000
Cost - 10000
Category - Computer
Depreciation Rate - 60%
Added in the first half of finacial Year 2007
Now the depreciation calculation for year 2007 would be 12000 x 60 /100 = 7200
Closing WDV for 2007= 12000- 7200= 4800
Case(I)
In the First half of financial Year 2008, I retire this asset by selling it for 2000 Rs and the cost of removal is 500 Rs.
What would be my depreciation workout in this case?
Case (II)
In the Second half of financial Year 2008, I retire this asset by selling it for 2000 Rs and the cost of removal is 500 Rs.
What would be my depreciation workout in this case?
Please Correct me if I have made any mistakes in the calculation.
Thanks,
Venkatesh
amit
(accountant)
(22 Points)
Replied 11 February 2009
hai ca friends
my name is amit
can u send me deprecation chart as per company act and as per income tax
my mail address is amit_kaykay2001 @ yahoo.com
thanks for ur help
CA CS CIMA Prakash Somani
(Landmark Group)
(23512 Points)
Replied 11 February 2009
Hi Venkatesh, You need not to calculate Depreciation if Block does not exist as on last day of the relevent FY.
If you want further clarification present your prob in easily readable form.
CAclubindia
