insurance and depriciation

This query is : Resolved

rajesh (Querist)
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16 March 2009 managing director has purchased a vehicle on his name . while company is paying insurance on it and also taking depriciation. Vehicle is used for the purpose of companys business.
Is is a allowable expense of company.

Rajesh Kumar

Rajesh Kumar (Expert)
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16 March 2009 Section 37 starts with "any expenditure incurred". What is relevant is the factum of incurrance of expenditure, it is irrelevant as to in what name the property is there.
For example if office is in the name of some other person, but expenditure incurred in maintenance of office is allowed. Trademark may be owned by some other person, but advertisement expenditure to promote that mark may be allowed as deduction. Thus ownership is not relevant for the purpose of Section 37.
Yes, if the property is in the name of other person, higher burden is on the assessee to establish that the expenditure is for business only.

CA.MANOJ LAMBA

CA.MANOJ LAMBA (Expert)
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16 March 2009 agreed

CA Nitin Wadhwani

CA Nitin Wadhwani (Expert)
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17 March 2009 No, depreciation is allowable to the legal owner of the asset only.
In my opinion, the insurance may even be not allowable if there is no written contract for right to use by the company with the director.

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