Why depreciation differs in companies act 1956 with that of income tax act 1961.?
MINIMUM BOOK PROFITS till AY 2000-2001 SECTION 115JA At present section 115JA provides fo levy of minimum tax on book profits of a company, where total taxable income as computed under the Income Tax Act in espect of any previous year relevant to assessment year 1997-98 onwards is less than 30% of its book profits, the total income of such company chargeable to tax shall be deemed to be the amount equal to 30% of such book profit. Book profit means net profit as shown in the profit and loss account prepared in accordance with the provisions of Part I and III of Schedule VI to the Companies Act, 1956, after making the following adjustments: profits increased by: a)Income tax paid or payable, and the provision thereof; or b)Amounts carried to any reserves by whatever name called: c)Provisions made for meeting liabilities, other than ascertained liabilities; d)Provision for losses of subsidiary companies; e)Dividends paid or proposed; f)Expenditure relatable to any income exempt under sec
The Depriciation to be provided in the companies act is for the pupose of preparation of annual account as per Schedule six of the companies act 1956 while in Income tax law uits for the purpose of calculating taxable income of the company.As per companies act the company is free to adopt method provided in income tax law provided the same is consistently followed and disclosed in the accounting policy statement.
