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Sec 43a

PRIYANKA (CA FINAL) (142 Points)

22 November 2013

Whether amount capitalised under sec 43A (consequential to changes in rate of exchange) of IT Act is eligible for full year depreciation or it also has to be bifurcated for 180 days???

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3 Replies

Kishor Bhat (CA final CS executive (from Bangalore)) (1881 Points)
Replied 22 November 2013

180 days. Further depends on circumstances of the case. For instance, date of purchase say nov'12 at 55 USD..and if assessee took forward exchange contract on 8.10.2013 at the rate of 60 USD. then depr for FY 2012-13 50% of normal rate at 55 USD and for FY 2013-14 full depreciation on 60USD

CA and CMA Ravinder Singh (CA and CMA) (853 Points)
Replied 22 November 2013

depreciation will be allowed only in the year of actual payment of foreign currency loan as per sec.43A

Kishor Bhat (CA final CS executive (from Bangalore)) (1881 Points)
Replied 22 November 2013

@ ravinder.. Court held in the case of NEW INDIA INDUSTRIES LTD that increase in liability due to rate fluctuation shall be added to actual cost of asset, irrespective of the fact whether the same is to be discharged in instalments which become due in near future. According to me As per the above , actual pmt is not required. once it added to actual cost of asset then depreciation shud be calculate on actual cost only. Further sec.43(1) says the same on exchange rate difference.