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Query

Sanjeevani Kanjilal (pursuing M.com) (45 Points)

27 May 2017

Can anyone please tell me whether depreciation is treated as a disallowed expenditure and added back to net profit while computation of taxable income?

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13 Replies

CA Revanth Bharathwaj M (Freelance consultant in Direct Tax and Financial Reporting) (373 Points)
Replied 27 May 2017

depreciation as per books is disallowed and one as per IT provisions is allowed

3 Like

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CA S Praveen Kumar Reddy (Chartered Accountant) (2195 Points)
Replied 27 May 2017

yes I agree with revanth

1 Like

akkuvali (CA Practice ) (44 Points)
Replied 27 May 2017

yes I agree

Sudarshan Sarda (CHARTERED ACCOUNTANT) (241 Points)
Replied 28 May 2017

DEPRECIATION IS NOT AT ALL DISALLOWED EXPENDITURE. IT IS ALLOWED EXPENDITURE IN CASE OF ALL THE ENTITIES. BUT IN CASE OF COMPANIES DEPRECIATION IN P&L ACCOUNT IS CHARGED AS PER COMPANIES ACT AND INCOME TAX IS CALCUKATED AS PER INCOME TAX ACT HENCE IN CASE OF COMPANIES DEPRECIATION AS PER INCOME TAX IS ADDED BACK AND AS PER INCOME TAX IS DEDUCTED FROM PROFITS.

2 Like

Bhavya Arora (10 Points)
Replied 28 May 2017

I do agree with the above replies but want to make an addition that ...... in case of 44AD or 44AE return depreciation won't be allowed as expenditure..

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CA Revanth Bharathwaj M (Freelance consultant in Direct Tax and Financial Reporting) (373 Points)
Replied 28 May 2017

not exactly miss it is instead deemed to be allowed and yu are required to maintain depreciation statements in case if u fall under tax audit requirement in future

Bhavya Arora (10 Points)
Replied 28 May 2017

I was only talking about depreciation as per Income tax Act,1961

vishakha goel (ca-final student) (42 Points)
Replied 28 May 2017

deduction of depreciation cant be claimed u/s 44AD

CA Revanth Bharathwaj M (Freelance consultant in Direct Tax and Financial Reporting) (373 Points)
Replied 28 May 2017

yes thats what i am saying. it us deemed to be allowed like section 24 a

thiruvayu (FCA) (155 Points)
Replied 28 May 2017

The answer is yes and after adding back depreciation to net profit, the depreciation allowable under income tax act is to be deducted from net profit.