Capital asset in name of proprietorship firm

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

13 May 2014 Dear Experts,

A person is having proprietorship firm ABC and he is also a partner in a Firm XYZ.
If a machinery is purchased in name of proprietorship firm and on same day of purchase the proprietor wants to introduce that purchased machinery in the partnership firm XYZ as his capital.
Then in such case who will claim the benefit of depreciation XYZ or ABC.
In my opinion since Partnership Firm XYZ is using that asset therefore XYZ should claim depreciation benefit. But at the time of assessment AO will say that the bill is in name of Proprietorship firm and depreciation is claimed in XYZ.

I want to know what is the proof of ownership for partnership firm for any moveable assets which is introduced by the partner.

Regards,

Nikhil Kaushik

Nikhil Kaushik (Expert)
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13 May 2014 ownership is not relevant for claiming depreciation. passbook entries for introduction of assets in the partnership. To further substantiate, make a small agreement for including the said asset in firm.

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Querist : Anonymous

Querist : Anonymous (Querist)

19 May 2014 Thanks Nikhil Sir for your kind reply.

I would like to further know that if VAT is paid on that machinery and the same machinery is introduced as capital in partnership firm on same day. Then who will claim the VAT sett off since on purchase bill tin of proprietor is mentioned and actually use of asset is done by partnership firm.

Regards,

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