Bungalow : whether depreciable or non-depreciable asset
This query is : Resolved
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29 September 2021
Dear All,
I have following query:
Mr. A gifted 1.50 Crore to his younger son Mr B, aged 25 years, to start the business. From this sum, Mr B purchased a bungalow. He has started his business of renting this bungalow to prospective clients.
1) Will this bungalow be treated as depreciable asset or non-depreciable asset?
2) If this bungalow is treated as depreciable asset, then the depreciation rate would be 10%. i.e. Rs. 15 lakhs depreciation. However, he is expecting total rental of Rs. 10-11 lakhs p.a. After all expenses, he will be in loss. Will he be liable to tax audit due to loss?
Kindly guide me.
Regards,
Suraj
I have following query:
Mr. A gifted 1.50 Crore to his younger son Mr B, aged 25 years, to start the business. From this sum, Mr B purchased a bungalow. He has started his business of renting this bungalow to prospective clients.
1) Will this bungalow be treated as depreciable asset or non-depreciable asset?
2) If this bungalow is treated as depreciable asset, then the depreciation rate would be 10%. i.e. Rs. 15 lakhs depreciation. However, he is expecting total rental of Rs. 10-11 lakhs p.a. After all expenses, he will be in loss. Will he be liable to tax audit due to loss?
Kindly guide me.
Regards,
Suraj
CA R SEETHARAMAN
(Expert)
30 September 2021
1 Bunglow rented out for functions, it will be considered as commercial use and depreciation can be claimed.
2 Tax audit not applicable in such a case.
2 Tax audit not applicable in such a case.
30 September 2021
Thank you Sir for your reply.
Bungalow is rented to tourists visiting that place.
Is it compulsory to claim depreciation if the bungalow is put to commercial use?
What if we do not consider this as business asset, though it is shown in balance sheet, and the depreciation is not claimed?
Kindly guide.
Bungalow is rented to tourists visiting that place.
Is it compulsory to claim depreciation if the bungalow is put to commercial use?
What if we do not consider this as business asset, though it is shown in balance sheet, and the depreciation is not claimed?
Kindly guide.
CA R SEETHARAMAN
(Expert)
30 September 2021
In case of commercial use depreciation is compulsory.
Consider it as residential house property no need to claim depreciation.
Consider it as residential house property no need to claim depreciation.
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CA R SEETHARAMAN
(Expert)
03 October 2021
You are welcome.......
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