Depreciation and section 43a

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Hardeep Singh (Querist)
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03 February 2016 Dear sir
If the liability is increased on exchange fluctuations under section 43A in the second half of the previous year then whether second proviso to section 32(1)(ii) shall apply or not.

CA CMA CS Ram Pavan Kumar Melam

CA CMA CS Ram Pavan Kumar Melam (Expert)
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04 February 2016 As per Section 43A, if there is any difference between stated cost in INR of the imported asset on the date of transaction i.e. bill of entry date and actual liability paid in INR to the supplier of the asset during any previous year, such difference shall be adjusted to the actual cost of the asset as defined u/s 43(1).

If there is any adjustment to the actual cost of the asset, the same will impact the depreciation as well. The depreciation shall be calculated on the value as arrived u/s 43(1) i.e. same actual cost applicable for with / without proviso 2 to section 32(1)(ii);