Explanation 5 to section 32(1)
This query is : Open
13 August 2016
As per explanation 5 to section 32(1), it is mandatory to claim depreciation. what is the reason for making it mandatory, even when unabsorbed depreciation can b c/f for the indefinite period?
13 August 2016
Depreciation is charged because it is deemed that there is decrease in value of assets over time when used. If you do not charge depreciation in any year it would mean that there is no such decrease in that particular year!!
Moreover, if it is not made mandatory then organisations will charge it at their own discretion which will leave room for manipulation of profits and shifting of profits from one year to another.
Moreover, if it is not made mandatory then organisations will charge it at their own discretion which will leave room for manipulation of profits and shifting of profits from one year to another.
14 August 2016
Thanx Ruchi.
But I want to ask that how can a company manipulates profits by not charging depreciation since even if a company incurs losses in any previous year and charges depreciation for the same previous year , it can claim unabsorbed depreciation indefinitely. So why will a company defer the depreciation?
14 August 2016
To show lesser losses in the current year. And you are taking the case of companies only. Take a proprietorship firm, it is charged tax on increasing slab rates. So tax charge can be easily shifted from one year to another year and one slab to another if depreciation is not mandated.
15 August 2016
I got it. Thank you Ruchi for your precious time :)
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Inventory of finished goods
- REGARDING 25 AS DATE OF PAYMENT AND DATE OF BOOKING
- Tds on building rent monthly
- Can we claim ITC of Feb-2024 in the month of November-2024 which was not claimed by oversight
- Clarification on Documentation of Paid-Up Capital Contribution by Directors
- Sale of property furniture sale
- Quiery in relation to GST liability in case of an advocate who has obtained GST registration.
- Confusion around Form 26QB fields
- RCM INVOICING FROM NOV-2024
- GST Regis.
- Applicability of Ind As to associate of associate
- LAST YEAR 2022-23 ITC IN NEXT YEAR 2023-24 REPORITNG IN GSTR-9
- MIS MATCH OF INVOICE NUMBER
- IGST Credit-Show cause notice issued-confusion
- Issue of gst e invoice
- How to adjusted advances given or receipt
- Foreign vendor without PAN unable to to register due to non receipt of OTP on foreign number ?
- 133(6) DIN INVALID format error - ->WHERE TO REPLY 133(6) notice?
- Query for dubts
- Regarding einvoice taken on nil rated sales
Trending Online Classes
CAclubindia
