01 October 2012
While preparing firm's balance sheet, in fixed assets for depreciation which rate should be used? Rate as per company law or tax law. Please explain.
01 October 2012
I think this is wrong. If you see ITR 5, in sheet BP they ask for depreciation debited to P&L and depreciation as per tax law. If in firm's accounts depreciation as per tax is to be used then it will not be as per ITR 5. And also deferred tax will also not arise. Clarify.
01 October 2012
If book deprecaition and income tax depreication is same then same amount will be allowed and disallowed in ITR and also there is no difference in book and income tax depreciation then no question of making any deferred tax asset.
01 October 2012
1. Depreciation rates provided in Companies Act are mandatory only for a company.
These rates are not mandatory for a partnership firm.
However, a partnership firm may adopt these rates or any other rates.
2. Normally depreciation in case of partnership firms is calculated at the rates provided in the Income Tax Act. This is done to avoid calculation problems and avoid DTA/DTL calculation.
3. While filing ROI, since the depreciation amount as per P&L and as per Income Tax Act is same, the same amount will be filled in the form and there will be no disallowance.
01 October 2012
Hope now your query is resolved you can use companies tax rate but to avoid difficulties use income tax rate, as companies tax rate is mandatory for companies and not for any other entity. and there is no other third tax rate.
CAclubindia
