20 February 2016
Suppose Cost of Asset is 1,00,000 Installation Charges is 10,000 Freight is 10,000 The amount we capitalize is 1,20,000 in books Quire is, Is there any section say's that Rs 1,20,000 should be the cost of asset as per Income Tax act 1961.?
20 February 2016
Section 32 of the Income Tax Act 1961 allows depreciation on assets put to use in the business while computing the profits of the business. The cost of assets is relevant only for computation of depreciation. Therefore to arrive at the cost one has to follow the GAAP and specific AS is any. Accordingly, the cost of an asset is inclusive of all incidental expenses incurred in making the asset usable. Hence the above concept of cost of fixed assets.
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