07 September 2010
A Partnership firm (Turn over below 40 lacs) is charging dep on machinery @ 10%. During 2009-2010, TurnOver exceed 40 lacs and firm had charged dep. on machinery @ 10%.
Can firm charge below 15% in books
what should be comment given in 3 CD report (Col. 14)regaring deprecation or can we calculate dep. as per income tax separately ffrom books
Can we change rate of dep. in books also during 2009-2010
07 September 2010
For accounting purpose,the firm can charge depreciation @ 10 % in the cited issue. But charginging of depreciation is mandatory as per Income tax Act,1961, and for tax purpose the partnership firm has to necessarily follow the rates prescribed in the Income Tax Rules,1962. As far as form 3CD is concerned, the tax auditor has to satisy himself that the assessee has complied with the accounting standards issued by the ICAI. However for the purpose of clause 14(d) the tax auditor has to compute the depreciation allowable under the Income tax Act,1961 and disclose it under that sub clause.
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