01 August 2009
Both the depreciation are not mutually exclusive. A company must calculate both the depreciation.
There is difference between depreciation and depreciation allowance(allowable depreciation). The depreciation under the Income Tax is for the limited purpose of calculating allowable depreciation in computing taxable profit.
Depreciation under the Companies Act is required to be provided to arrive at the financial reasult / to provide for replacement etc.
Depreciation as per Companies Act is taken in to the books of account.
Income tax provides for calculation of depreciation under written value method based on block of assets concept.
Depreciation under companies act provides two alternatives, ie. Straight line and WDV method. Accounting Standard 6 & 10 needs to be followed.
CAclubindia
