Tax deduction

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Querist : Anonymous

Querist : Anonymous (Querist)

27 January 2011 I have rental income, this year i took a loan and bought a car , would i be able to deduct the intrest i pay for the car in my income tax, or can i claim depreciation for the vehicle , i am woman assesse and have no other income

CA SURENDRA KUMAR RAKHECHA

CA SURENDRA KUMAR RAKHECHA (Expert)

27 January 2011 I am reproducing your question :

I have rental income, this year i took a loan and bought a car , would i be able to deduct the intrest i pay for the car in my income tax, or can i claim depreciation for the vehicle , i am woman assesse and have no other income.

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1. Interest : No deduction.

2. Depreciation : No deduction

in your Income-Tax Return.

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These are available to assessees having income from business or profession.

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If you have some income of tuition, art work, small trading etc., then you can claim interest and depreciation both.

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But in these cases also; you have to prove that the car has been used for business or profession exclusively.

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Otherwise pro-rata interest and depreciation would be allowable.

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Querist : Anonymous

Querist : Anonymous (Querist)

28 January 2011 thank you sir for your reply

can you explain how the pro rata interest and depriciation would be allowed and calculated

CA SURENDRA KUMAR RAKHECHA

CA SURENDRA KUMAR RAKHECHA (Expert)

28 January 2011 When you use a Car for your business purpose as well as for private use; then you have to maintain a log book ( to and fro records -where you went by car).

Then you have to calculate the petrol expenses in terms of kilometers travelled for business purpose and personal use.

The above criteria is applicable for big companies.

For practical purpose like your case; ITOs generally assess the income on the basis of material available on the face of records and your explanations regarding the expenditure made.

Similar way is adopted for depreciation.

Querist : Anonymous

Querist : Anonymous (Querist)

28 January 2011 thanks again sir for prompt reply... although i dont understand what you have stated thank you again