Depreciation on used assets.
This query is : Resolved
11 August 2010
Company has purchased used truck vehicles from another company. What will be the depreciation for these assets to purchasing company ?
11 August 2010
If the assets are being used normally in business then normal depreciation rates applicable.
12 August 2010
Ok
So Depreciation will be calculated on the sale price paid for vehicles by the purchaser ?
whethr this scenario will changed if this is transaction between related parties ?
So Depreciation will be calculated on the sale price paid for vehicles by the purchaser ?
whethr this scenario will changed if this is transaction between related parties ?
12 August 2010
Explanation 3 to section 43(1)
Where, before the date of acquisition by the assessee, the assets were at any time used by any other person for the purposes of his business or profession and the 13[Assessing] Officer is satisfied that the main purpose of the transfer of such assets, directly or indirectly to the assessee, was the reduction of a liability to income-tax (by claiming depreciation with reference to an enhanced cost), the actual cost to the assessee shall be such an amount as the 13[Assessing] Officer may, with the previous approval of the 14[Joint Commissioner], determine having regard to all the circumstances of the case.
So the WDV of the previous owner will be considered as ur purchase price and depreciation allowable on that amount in case it is purchase between related parties..
Where, before the date of acquisition by the assessee, the assets were at any time used by any other person for the purposes of his business or profession and the 13[Assessing] Officer is satisfied that the main purpose of the transfer of such assets, directly or indirectly to the assessee, was the reduction of a liability to income-tax (by claiming depreciation with reference to an enhanced cost), the actual cost to the assessee shall be such an amount as the 13[Assessing] Officer may, with the previous approval of the 14[Joint Commissioner], determine having regard to all the circumstances of the case.
So the WDV of the previous owner will be considered as ur purchase price and depreciation allowable on that amount in case it is purchase between related parties..
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