Personal asset brought into business

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This query is : Resolved

Vignesh Senthil Nayagam (Querist)

11 August 2014 Assessee started a consultancy business on April 2013(Proprietor concern - Income Tax Filing, TDS Filing, Accounting & Book Keeping Services).

1. Assessee used his TWO Wheeler for his business purpose...Purchase date of vehicle falls in the month February 2012, Invoice Available...He bought a separate two wheeler for his personal purpose after bringing the two wheeler into his business...so his old two wheeler is wholly and exclusively used only for business..

Question : At what cost should the two wheeler be brought into business...since it has been purchased 1 year before should it be brought after charging 1 year depreciation or at its original cost.

2. similarly the assessee has used his personal desktop computer and printer for his business...these assets were purchased long back for which no invoice is available....

Question : At what cost should the desktop computer and printer should be brought into business...

My View:
As per Section 43(1) Explanation - 5----->
Where a building previously the property of the assessee is brought into use for the purpose of the business or profession after the 28th day of February, 1946, the actual cost to the assessee shall be the actual cost of the building to the assessee, as reduced by an amount equal to the depreciation calculated at the rate in force on that date that would have been allowable had the building been used for the aforesaid purposes since the date of its acquisition by the assessee.

This section speaks about only building used for personal purpose now brought into business....It says notional depreciation should be charged and bring into books of accounts....

So at what cost should the two wheeler be brought into books

and

at what value should the computer and printer should be recorded in the books...

Madav

Madav (Expert)

11 August 2014 Please find below my answers

Answer 1 : Yes, Personal Vehicle can be brought into business on the value after charging depreciation. (you can bring this into business as capital)

Same will be applicable to computer as well.