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value less then 5000

Angad kr kannaujiya (Studant) (169 Points)

29 April 2011

Should i w/off those fixed assets which value have less then 5000/-

Thanks in advance

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7 Replies

Suraj S (Audit Executive) (335 Points)
Replied 29 April 2011

well angad ji the act has provided for clause where u can w/off assets whose WDV is less than 5,000. but its not madatory....

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Ankit Kukreja (Student) (40 Points)
Replied 30 April 2011

As per Income Tax Act'1961 you can treat the fixed assets whose value is less then Rs.5000 as revenue expenditure and there is no need to capitalize them, therefore as you can treat them as revenue item, you can put them directly in the P&L A/c and hence you can write off the fixed assets having value less then Rs.5000.

srinivasan (service) (898 Points)
Replied 30 April 2011

No If it is a capital asset you cannot write off the asset irrespective of its value. For the purpose of IT, you need to capitalise the asset by adding to the appropriate IT block of that fixed asset. You shall claim the depreciation u/s 32 accordingly.

Therefore if you have the policy to write off the asset in you books of accounts (accounting policy) it is recomended to capitalise the asset in the books and write off in the accounts 100% but add to the respective block of assets for IT purpose and claim the appropriate deprecition under IT. This will help you to reconcilet the additions as per books and IT during the assessments.

Pavan Bharadwaj (Practicing Chartered Accountant) (353 Points)
Replied 01 May 2011

As per IT act you can't write off assets even if their value is less than Rs. 5000.

Amol Gopal Kabra (CA,CS,DISA) (Practicing CA) (8539 Points)
Replied 01 May 2011

There is no Section in Income Tax Act which specifies to write off the fixed assets of value less than Rs.5,000.00. The only criteria in Income Tax Act for bifurcation is whether it is a Capital Expenditure or a Revenue Expenditure. However, the provision of Rs.5,000.00 is given by the Companies Act, 1956.

Even if the WDV of the assets aquired in any earlier financial years goes below Rs. 5,000.00, then also you cannot write off the assets unless and untill you can prove that the usable life of the asset has come to an end or the asset ceases to be in existence.

- CA. Amol G. Kabra