29 January 2008
A Partnership firm has been converted as pvt ltd company under chapter IX of the companies act, 1956 on 20th October 2007. How much depreciation will be allowed to partnership firm and company. As per Income Tax Act Depreciation is not allowed in the year of disposal/transfer of assets. Since Partnership Firm has been converted during the financial year 2007 - 2008 weather depreciation will be allowed to firm or not. As per Income Tax Act Depreciation to the Company should be allowed for half year as Company came into existiant only on 20.10.2007. It appears that only half depreciation will be allowed for financial year 2007 - 2008. Is it not a disadvantage on conversion. Plz reply catagorically stating each event with reasons.
29 January 2008
first depreciation should be calculated for whole of the year, then it should be apportioned to both the concerns in the ratio of use of the fixed assets. More clearly it should be proportionate to days of use.
05 April 2012
Section 32 provides that in case of a succession of a partnership by a company the depreciation for the year shall be apportioned between them in the proportion of the number of days the asset was used by them.
Accordingly, depreciation for the whole year shall be computed and will be apportioned as follows:
1.4.07 to 19.10.07 - Firm 20.10.07 to 31.3.08 - Company
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