CA
910 Points
Joined January 2009
Dear,
Under income tax no revaluation of any assets is allowed.
further under income Tax no revaluation of assets is allowed while its allowed under company law therefore it gives rise to difference in depreciation under two sets of books, which is in the nature of timing difference .because what would be written off under two sets of boos is only the actual cost of assets in different time .as u said in case of revaluation,depreciation pertains to revalued figure is adjusted with revaluation reserve.it means only actual cost under both is write off. therefore being timing difference require creation of Suitable DTA & DTL
And for your query if an partnership firm is converted into a company under succession and its takes benefit of section 47 of income Tax Act then cost of acquisition has to be taken as cost to previous owner and which is WDV to previous owner in case of depreciable assets.and accordingly depreciation is calculated.in this case there will be no DTA & DTL as under company law actual cost paid will be booked while for income tax purpose cost to previous owner that is WDV to previous owner will be taken.and this difference is permanent in nature which will affect depreciation unde two sets of books.hence no creation of DTA & DTL.only disclosure will be required in notes to Accounts
and if benefit under section 47 is not taken (means capital gain is paid) then actual cost paid for acquiring the assets is taken as cost of acquisition and accordingly depreciation is calculated.in this case no difference as both books of accounts will book actual cost paid for and hence No DTA & DTL
and im any case revaluation of assets under income Tax is not made.
Its very logical i hope you will have understood.
All the best
CAclubindia
