Depreciation

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Bhavesh (Querist)
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26 October 2013 Plz Tell me if director use his own car for the business purpose, depreciation on this car is deductible in the company profit or not

CA Pallav Singhania

CA Pallav Singhania (Expert)
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26 October 2013 If car is regs. in the name of director but is in possession of company and is used for buisness purposes u are eligible to claim depreciation.

Citation: Edwise Consultants Pvt. Ltd. Vs. ACIT (391/MUM/2011)

Ganeshbabu K

Ganeshbabu K (Expert)
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26 October 2013 Agreed with aryan ji
.
.
you can claim depreciation in books by passing a board resolution saying cars will be used for business purpose
..
however as far as income tax is concerned depreciation will not be allowed as per recent case study quoted by aryan,

Bhavesh

Bhavesh (Querist)
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26 October 2013 Whether I can deducted depreciation or not as per income tax, car is register in the name of Director but use in the business purpose plz give section or notification or case low

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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26 October 2013 Follow what aryan said its correct.

Amrutesh

Amrutesh (Expert)
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26 October 2013 Aryanji is telling as per the case law mentioned, depreciation is allowed under income tax, as the case name includes acit(Asst. Commissioner of Income Tax.) Ganeshji you are saying it is allowed as per companies act, by passing board resolution and not under income tax by referring to same case law. Confusing..

Nikhil Kaushik

Nikhil Kaushik (Expert)
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27 October 2013 Under Income-tax Act, 1961, It wont be allowed unless it can be justified that it was only in case of emergency the asset was bought in the name of the director.

The Edwise case too is against the assessee.

Also, as per Edwise, it won't even matter if the company paid for the cars. Rather such as amount may be added as a loan in the hands of the directors.

Given that in your case the director is using his own car, question of claiming depreciation doesn't arise at all.

What can be done though is that the Company may pay rent to the director for use of his car and he can claim depreciation against such income thereby effectively allowing tax deduction to the company.

Amrutesh

Amrutesh (Expert)
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27 October 2013 Thanks Nikhil

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