DEPRECIATION

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PARIMAL DILIPKUMAR GOLWALA (Querist)
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27 August 2010 IN THE PRIVATE LIMITED COMPANY,WE HAVE PURCHASE OF CARS IN THE NAME OF THE DIRECTORS BUT PAYMENT IS MADE ON COMPANY ACCOUNTS. MY QUESTION IS
1.WHETHER SHOULD BE DISCLOSED CARS IN THE COMPANY BOOKS OF ACCOUNTS.
2.AND ALSO CHARGED DEPRECIATION ON CARS & INTEREST PAYMENT ON CARS WHICH IS HYPOTHE. AGAINST FINANCE COMPANY IN THE COMPANY BOOKS OF ACCOUNTS.

Thrissurkkaran Ishtan

Thrissurkkaran Ishtan (Expert)
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27 August 2010 1. If the car is in the name of directors, the payment made should be shown as a loan to the Directors. You cannot show the asset in company's books.

2. Since you cannot show the car as an asset, you cannot claim depreciation.

The next best step you can do is to pay rent to directors for usage of car (leasing) from which they can repay the loan taken from the company.

Pls revert is the answer is not satisfactory.

PARIMAL DILIPKUMAR GOLWALA

PARIMAL DILIPKUMAR GOLWALA (Querist)
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27 August 2010 YES THANK YOU FOR GIVEN ME INFORMATION BUT SIR I HEARD THAT MAY BE DEPRECIATION HAS TAKEN A COMPANY.

SIR ALSO TELL ME THAT IN THE CAR BILL MENTIONED THIS TYPE OF BILL : DHIREN C/O. XYZ PVT. LTD. WHETHER ANY DIFFERENCE ABOUT CAR DOES NOT SHOWN IN THE BOOKS OF ACCOUNTS

mohinder kansal

mohinder kansal (Expert)
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27 August 2010 In this case, the car is basically in the name of the company i.e., Dhiren c/o XYZ Pvt. Ltd. and payment is also made by the company. The car can be shown as assets of the company in its books of account and depreciation can be claimed. Loan to directors can be treated as deemed dividend chargeable to tax in the specified circumstances under IT Act.

PARIMAL DILIPKUMAR GOLWALA

PARIMAL DILIPKUMAR GOLWALA (Querist)
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27 August 2010 Thanks Mohinder, If there are any judgement related to above issue sir

Thrissurkkaran Ishtan

Thrissurkkaran Ishtan (Expert)
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27 August 2010 I suppose the registered owner of the car is not the company but an individual.

Agreed on the dividend aspect from IT perspective.

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