Answer / ekansh garg

There are 2 types of depreciation charts:

Income tax act depreciation chart is given in Sec. 32 of
Income Tax act 1961, and is required for the computation
of 'income from business and profession' as per income tax
act.

Whereas companies act, 1956 Schedule XIII gives the
depreciation rates as per companies act. This chart is
applicable only to companies.

Both the charts are required to calculate depreciation on
fixed assets in case of companies. However, in case of
other assessees like individual,HUF and Firms only income
tax chart is required.

While computing total income of a company for the purpose
of payment of tax:
Profit/loss as per Profit and Loss account (prepared
according to Companies act) is taken and depreciation as
per companies act is added back to it. Then depreciation as
per Income tax act is reduced from the above amount. The
amount so arrived is the amount on which tax will be paid
subject to any other adjustments.

Also, deffered tax as per AS 22 is calculated on the
difference of Carrying amounts of Fixed Assets as per
companies act and income tax act, and the same is adjusted
in the balance sheet and profit and loss account of the
company.

Answer / ekansh garg

The above answer given by me is absolutely correct.
The companies act gives the depreciation rates which are
suppose to be followed by companies only.
The companies are bound to use these rates.
Two types of rates are given in the depreciation schedule:
1. Written down value basis
2. Straight Line basis

The companies have the option to follow either of these rates.

"Both the charts are required to calculate depreciation on
fixed assets in case of companies. However, in case of
other assessees like individual,HUF and Firms only income
tax chart is required" by this it is meant that the
companies act require companies act rates for preparation of
P & L A/c as per Schedule VI and for computation of income
tax act they require I.T Rates.

However companies can also charge excess depreciation if
they claim more usage of the asset. But in that case MAT
provisions will also be have to be kept in mind.

But for computation of I.T for other assessees only I.T
rates are required.
If Mr. Srikanta or anyone else have any further doubt
contact me at ekanshgarg@gmail.com

Answer / ketan

what is the company act?

Answer / srikanta

answer given by Mr. Ekansh garg is partially right but the
following line said by him is totally wrong-
Both the charts are required to calculate depreciation on
fixed assets in case of companies. However, in case of
other assessees like individual,HUF and Firms only income
tax chart is required.
bcoz companies act has given depn sch 4 co. which is the
minimum rates should b taken & i.t depn rates 4 i.t computation
every co,firms etc 4 preparation of accounts should take
their own policy on depn rate & not to depend on the
companies act or i.t act

Answer / ketan

ans is right

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