depreciation

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ankit jain (Querist)
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04 June 2011 my company owns a rental shop from which we r getting rent monthly n we r not in business of renting shops how the income of rent is taxable and under which head of IT n can we claim depriciATION ON THE RENTED OUT SHOP ?

Vivek Mehta (CA, DISA,CS, MBA)

Vivek Mehta (CA, DISA,CS, MBA) (Expert)
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04 June 2011 The Income from the house property will be HOuse Property Head Income if the Shops are not rented for the benefit of the business of the company. And for Depreciation its like ki you can't claim Depreciation on that Shop.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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04 June 2011 Question of Depreciation arises in the case of Shop or Business Premises in the mind of every taxman. But when the shop is sold, it is a fact that the Consideration Receivable is always higher that the WDV. Which results into a huge amount of Short Term Capital Gain.

The Practice of not charging depreciation on property is being adopted by certain tax consultants. It is argued that the property is meant for investment. At the time of sale Long Term Capital Gain arises on such property and exemption U/s 54F or 54EC can be taken.

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ankit jain

ankit jain (Querist)
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04 June 2011 if depreciation is not taken and treated as an investment then what will happen to any expenses inccured for the purpose of insurance and for the purpose of any maintenance charges paid to management towards shop

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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05 June 2011 In reference to a let out property , 30% of Net Annual Value is allowed as Standard Deduction. No other deduction can be claimed by the owner regarding Insurance and maintenance charges paid by him.

CA Sumat Singhal

CA Sumat Singhal (Expert)
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05 June 2011 Income will be taxable under head income from house property and deduction will be 30% u/s 24 and as far as depn is concerned no deprn will be admissible..

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ankit jain

ankit jain (Querist)
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05 June 2011 hi all thanks for the reply
my related point is what will be the treatment under companies act
firstly of rent and second of insurance charges paid and wether 30% deduction available or not in CO act

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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05 June 2011 In companies act 30% deduction is not avaialable. You have to claim depreciation at the prescribed rates. Income and Expenses both are routed through The Profit & Loss A/c.

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