Is it possible ?

Originally posted by : CA Finalist
	One of my client didnot charge depreciation from years 2010- 31/3/2014 in P&L account, but has just shown the carrying amount and accumulated depreciation figures in B/S and in Notes to accounts.  The Auditor has qualified the financials on non-adherence to AS-6, and the management was ok with it for all those years. I suggested him to atleast now debit depreciation of earlier years of upto 31/3/2014, and for FY 2014-15.  The client do not want to charge depreciation even for 2014-15, 15-16, and only wants to debit in 16-17 when their profits break-even. (They are OK with whatever Qualification the Auditor gives) he wants to debit depreciation of 16-17, and depreciation of earlier years in installments.   Is that really possible? Is it not un-fair? Doesn't Companies Act penalise? What repurcussions does he have from Income Tax perspective?   How well can I suggest him?

Violition of section 123 and AS 6.Companies Act Doesn't penalise. Qualify the report and other statutory reports. and Also mention the issue in MCA FORMS

Originally posted by : CA Finalist
	One of my client didnot charge depreciation from years 2010- 31/3/2014 in P&L account, but has just shown the carrying amount and accumulated depreciation figures in B/S and in Notes to accounts.  The Auditor has qualified the financials on non-adherence to AS-6, and the management was ok with it for all those years. I suggested him to atleast now debit depreciation of earlier years of upto 31/3/2014, and for FY 2014-15.  The client do not want to charge depreciation even for 2014-15, 15-16, and only wants to debit in 16-17 when their profits break-even. (They are OK with whatever Qualification the Auditor gives) he wants to debit depreciation of 16-17, and depreciation of earlier years in installments.   Is that really possible? Is it not un-fair? Doesn't Companies Act penalise? What repurcussions does he have from Income Tax perspective?   How well can I suggest him?

Violition of section 123 and AS 6.Companies Act Doesn't penalise. Qualify the report and other statutory reports. and Also mention the issue in MCA FORMS

Secondly, as per section 32 its mandatory. they have to depreciate it for income tax laws.

@ karan...

it is no violation of sec 123... the company doesn't want to declare dividend... unless it wants to declare dividend the company is in no violation...

just tell me if any penal provision applies for not charging dep to P&L by virtue of sec 129(9)... if yes, are there any caselaws.. 

Failure to comply with both 129(1) and 129(5) may attract penalty u/s 129(7).

Thank you :-)