Depreciation on vehicle

Save Share

This query is : Resolved

deepali shukla (Querist)

27 January 2013 If a car is purchased on Director's name (invoice and RTO tax on Director name) but use of vehicle is purely for company. Then can we book this car in a/cs of Company and take depreciation on it. Or else what will be treatment. Pls explain

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

27 January 2013 Lucknow Bench of the Income tax Appellate Tribunal in the case of Surinder Kaur vs. ITO 27 SOT 28 (Luck.) has explained this aspect in a very well reasoned manner by noting that, “mere non-registration of vehicles under the ‘Motor Vehicles Act’ would not disentitle an assessee for claiming depreciation. The purpose of registration under the ‘Motor Vehicles Act’ is different. It permits an assessee to ply the vehicle in any public place. It does not indicate a legal evidence of ownership. If a vehicle is registered in the name of a person, the presumption is that he is the legal owner of the vehicle but where the vehicle is not registered in the name of the assessee then it is not a presumption that the assessee is not the owner of the vehicle.
.
The ownership of the vehicle has to be determined from the finances utilized in making the purchases of vehicles, its control and management, use of the same as an apparatus for earning income, declaring income earned from those vehicles in the return of income and their acceptance by the department and there being no counter claim against such declaration.”
.
So in the per-view of the above decision
you can book this car in the accounts of the company.
.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now