depreciation
This query is : Resolved
09 November 2009
Can i show depreciation as per Income Tax Act in Books of account prapared under schedule vi of the Comapany's Act? It is Pvt Ltd Company....
10 November 2009
Hi Raj,
Whether it is a Pvt. Ltd. company or public Ltd. company, it is governed by comp act. There are certain rates provided for claiming depreciation under sch-XIV of comp act. But those are minimum rates of depreciation.
So in my view, you can take depreciation rates of Income tax act as those are on higher side if it is necessary to do so. But remember you have to give clarification for the same in notes to accounts.
Whether it is a Pvt. Ltd. company or public Ltd. company, it is governed by comp act. There are certain rates provided for claiming depreciation under sch-XIV of comp act. But those are minimum rates of depreciation.
So in my view, you can take depreciation rates of Income tax act as those are on higher side if it is necessary to do so. But remember you have to give clarification for the same in notes to accounts.
10 November 2009
Schedule VI is applicable both to the public and private company. In my opinion you need to calculate depreciation as per the Companies Act.
10 November 2009
I hold the view of Mr. Sandeep.
10 November 2009
with due respect to all the above answers
a co. may charge depreciation as per income tax rates to avoid provision for deferred tax liability. here there are some issues, which one should consider :
1. the depreciation policy in the books has to be justified in terms of its economic useful life in accordance with AS-6. that may be difficult in the given case, since the use of income tax ratesare generallyaccelerated and not based on the economic useful lives of the assets
2.increaing depreciation charge would reduce MAT liability but would also reduce distributable profits for paying dividends.
a co. may charge depreciation as per income tax rates to avoid provision for deferred tax liability. here there are some issues, which one should consider :
1. the depreciation policy in the books has to be justified in terms of its economic useful life in accordance with AS-6. that may be difficult in the given case, since the use of income tax ratesare generallyaccelerated and not based on the economic useful lives of the assets
2.increaing depreciation charge would reduce MAT liability but would also reduce distributable profits for paying dividends.
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