Deferred Tax working

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chirag (Querist)
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16 February 2011 Dear All,
I am doing statutory audit of unlisted company, which is preparing its financial statements for 9 months period, i.e. 01.04.2010 to 31.12.2010.
my query is for addition of fixed assets from 01.04.2010 to 31.12.2010 depreciation as per companies act to be taken based on no of days, but for calculation of deferred tax working, i have to consider depreciation as per income tax act.
my query is if addition after 1.10.2010 so what depreciation i have to take as per income tax act, whether it should be half depreciation or total percentage multiply by 3 months and divided by 12 months or wat? kindly reply soon..

CA bhargava

CA bhargava (Expert)
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19 February 2011 As per the Income tax act, for calculating the depreciation, the method is,
If the asset is used for less than 180 days , then 50% of the depreciation is to be calculated.
for example, if u purchase a fixed asset on 1.3.2010 and for the year ending 31.3.2010, even the asset is used for 1 month , the deprecitaion to be charged=amount *rate /2
it is not that how much we have used.

Therefor in the above problem , the depreciation to be taken is for 6 months even if u have used for less than 6 months.
(half depreciation)