ITR of FIRM and claiming of deprication

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This discussion clarifies the Income Tax Return (ITR) filing and depreciation claim process for a new partnership firm established in April 2020. If a business hasn't commenced operations by March 31, 2021, expenses incurred are treated as pre-operative costs to be capitalised. Depreciation can only be claimed on fixed assets put to use by that date. The firm must file an ITR-5, even with a loss, to carry forward losses for future set-off.

RAMDEVA RAM JYANI

RAMDEVA RAM JYANI (Querist)

09 June 2021 dear sir
we start a partnership firm in april 2020 for starting a menufacturing unit, we purchase land and start bulding cunstruction start in 2020-21 but no singal machinery installed and business not started up to 31-03-2021, some expences was incured like building, bank loan processing fee, and small amount of interest charged by bank on loan disbursed for building making.
please guid on following issue-
1. filing of itr
2. charging of deprication
3. treatment of expenditure in income tax
thanks

CMA Poornima Madhava

CMA Poornima Madhava (Expert)

09 June 2021 1) Return of loss to be compulsorily filed in ITR5. Loss can be carried forward for future set off.
2) If there are any fixed assets that are put to use as on 31st March 2021, you may claim deduction on account of depreciation
3) Business expenses can be claimed as deduction

PARAS CHHAJED

PARAS CHHAJED

(Expert)

09 June 2021 If business is not commenced then all the expenses till commencement of business to be capitalized as pre-operative expenses and to be apportioned among the cost of fixed assets. No depreciation to be charged as assets not put to use. Return of income to be filed by the specified date, u/s 139(1) to claim carry forward of loss if any. If it is a company or firm then irrespective of income or loss the Act required compulsory filing of return of income.

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