E-filing - calculation of depreciation on vehicle

Efiling 698 views 5 replies

ashwin

50 Points Joined August 2015

This is my first post on this forum :).

I am trying to do my efiling and under schedule DPM - Plant and Machinery at 15% I have a vehicle.

3. WDV on First day of previous year : 100000

4. Additions > 0

5. Consideration or other realization : 50000

6. Amount on which depreatiation at full rate > 50000

7. Additions for a period of less than 180 days : 200000

8. Consideration or realizations > 0

9. Amount on which depreciation at half rate : 200000

10. Dep at full rate : 7500

11. Dep at half rate : 15000

14. Total dep : 22500

17 Written down value : 227500

Now logically this does not tally. I had a car whose written down value was 1 lakh and I sold for 50 thousand. So I incurred a loss of 50 thousand on sale of car.

Then I purchased a new car for 2 lakhs.

So logically the written down value at the end of the year should be 2 lakhs - 15000 so 185000

So why does the income tax form generate a different written down value? Or is it that I am entering some value wrong? Kindly guide me.

Thanks

Replies (5)

ashwin

50 Points Joined August 2015

Any help on this? Still not able to get the correct Written Down Value at end of the year. The written down value cannot be more than the asset value!

CA. Roopali Kadam

Jobs on assignment basis.

1481 Points Joined December 2009

Sec 32

(i) in respect of any previous year relevant to the assessment year commencing on the 1st day of April, 1988, the aggregate of the written down values of all the assets falling within that block of assets at the beginning of the previous year and adjusted,—

(A) by the increase by the actual cost of any asset falling within that block, acquired during the previous year;

(B) by the reduction of the moneys payable in respect of any asset falling within that block, which is sold or discarded or demolished or destroyed during that previous year together with the amount of the scrap value, if any, so, however, that the amount of such reduction does not exceed the written down value as so increased;

and sec 50

https://www.incometaxindia.gov.in/_layouts/15/dit/Pages/viewer.aspx?grp=Act&cname=CMSID&cval=102120000000041612&k=&IsDlg=0

On reading both sections you will find the above calculation is correct as per income tax provisions

ashwin

50 Points Joined August 2015

Thanks for your response. So I read the sections and based on what you say the final written down value would be correct as per Income Tax.

But I think from a logical point of view the computation would be wrong as your written down value should not be more than the value of your assets.

CA. Roopali Kadam

Jobs on assignment basis.

1481 Points Joined December 2009

Your logic is right. Depreciation as per accounting standard is calculated as per your logic. But We cannot interpret in law as per our logics. There is block of asset concept in income tax act because of which our logic will not work here