Tax Consultancy

  DEPRECIATION UNDER INCOME-TAX ACT WHAT IS DEPRECIATION? As per law of lexicon depreciation is defined as positive decline in the real value of a tangible asset because of consumption, wear and tear or obsolescence. In accountancy, depreciation refers to two aspects of the same concepts: The decrease in value of assets; The allocation of cost of assets over a period in which the assets are used. In Income Tax, depreciation is a charge against the income. It is an allowance on capital assets acquired and put to use. There are different methods of calculating the depreciation like straight-line method or written down value (WDV) method. The Income-tax Act, 1961 (‘the Act’) recognizes WDV method, save and except for undertaking engaged in generation or generation and distribution of power. BLOCK OF ASSETS [SECTION 2(11)] Prior to the 1986, the Income-tax Act allowed the calculation of depreciation in respect of each capital asset separately. The computation of depreciation allowance ...

  PROFITS AND GAINS OF BUSINESS OR PROFESSION BUSINESS As per section 2(13) of the Act, “Business” includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. PROFESSION As per section 2(36) of the Act, “Profession” includes vocation. PROFITS AND GAINS OF BUSINESS OR PROFESSION Sections 28 to 44DB deals with computation of income under the head “Profits and gains of business or profession”. The sections may be classified into: Sections 28 to 44DB deals with computation of income under the head “Profits and gains of business or profession”. The sections may be classified into: Chargeability – Section 28 Computation – Section 29 Specific deductions – Sections 30 to 36, section 38 General deduction not specifically covered – Section 37 Amount not deductible – Section 40 Expenses or payments not deductible in certain circumstances - Section 40A Deductions only on actual payment – Section 43B Special cases of profits chargeabl...