07-09-2009, 08:11 PM
my queries are
1. why didnt u calculated deprecition on each asset as per the rate given in the question. i provided all the detail simply because of Calcuation of depreciation on each assets.
Now assuming that ur assumed figures have taken all assets into account my question are
ACCOUTING
1. if u treating land and building as rent free accomodation to director then why u charging depreciation @ 10% on each asset in calculating accounting profit. since asset is used not for business purpose how can u charge depreciation in the company accounts. how this accomodation will provide any future cash flows to the company.
TAXATION
1. why u treating accomodation provided to director as business asset and charging full year depreciation while calculating taxable profit of company . i quote subsection (1) and (3) of ITO,2001
(1) a person shall be allowed a deduction for the depreciation of the personâs depreciable assets used in the <b>personâs business </b> in the tax year.
(3)Where a depreciable asset is used in a tax year partly in deriving income from business chargeable to tax and partly for another use, the deduction allowed under this section for that year shall be restricted to the fair proportional part of the amount that would be allowed if the asset were wholly used to
3[derive] income from business chargeable to tax
in my view depreciation will be calculated as
500,000 x 20% x 6/365
(assume that visitor stay for 3 days and 2 times a year)
The reason is that building is used for only 6 days for business purpose.
2. I QUOTE SUBSECTION (8) OF SECTION 13
Where, in a tax year, an employer has provided an employee with a perquisite which is not covered by sub-sections (3) through (12), the amount chargeable to tax to the employee under the head âSalaryâ for that year shall include the fair market value of the perquisite, 3[except where the rules, if any, provide otherwise,] determined at the time it is provided, as reduced by any payment made by the employee for the perquisite.
IN MY VIEW air conditioner, equipments, of Rs. 2,000,000 shall also be added to the salary of director keeping in view the above provision.
1. why didnt u calculated deprecition on each asset as per the rate given in the question. i provided all the detail simply because of Calcuation of depreciation on each assets.
Now assuming that ur assumed figures have taken all assets into account my question are
ACCOUTING
1. if u treating land and building as rent free accomodation to director then why u charging depreciation @ 10% on each asset in calculating accounting profit. since asset is used not for business purpose how can u charge depreciation in the company accounts. how this accomodation will provide any future cash flows to the company.
TAXATION
1. why u treating accomodation provided to director as business asset and charging full year depreciation while calculating taxable profit of company . i quote subsection (1) and (3) of ITO,2001
(1) a person shall be allowed a deduction for the depreciation of the personâs depreciable assets used in the <b>personâs business </b> in the tax year.
(3)Where a depreciable asset is used in a tax year partly in deriving income from business chargeable to tax and partly for another use, the deduction allowed under this section for that year shall be restricted to the fair proportional part of the amount that would be allowed if the asset were wholly used to
3[derive] income from business chargeable to tax
in my view depreciation will be calculated as
500,000 x 20% x 6/365
(assume that visitor stay for 3 days and 2 times a year)
The reason is that building is used for only 6 days for business purpose.
2. I QUOTE SUBSECTION (8) OF SECTION 13
Where, in a tax year, an employer has provided an employee with a perquisite which is not covered by sub-sections (3) through (12), the amount chargeable to tax to the employee under the head âSalaryâ for that year shall include the fair market value of the perquisite, 3[except where the rules, if any, provide otherwise,] determined at the time it is provided, as reduced by any payment made by the employee for the perquisite.
IN MY VIEW air conditioner, equipments, of Rs. 2,000,000 shall also be added to the salary of director keeping in view the above provision.
