Indudhar (Tax Advocate) (427 Points)
01 October 2012An vehicle is purhased in the name of the partner and is accounted in book of accounts of the firm, can the firm claim the depreciation on such asset?
Please guide me
Bhavi
( CA)
(82 Points)
Replied 01 October 2012
It depends on whether the partner shall have any rights towards the asset.
In order to claim dep a condition is the the assessee shaould be the owner of the asset. But if the firm is possessing price risk and is rightly receiver of any income tht arises from the asset, it is clear tht even though the asset is in the name of the partner, the asset belongs to the firm and it is exclusively used for their business.
One safe option is to treat the vehicle as capital introduced by the partner. Then you can depreciate the asset in the books of the firm since "substance over form" shall prevail.
"Live class on Python for Financial Analysis: Unlocking Efficiency in Accounting and Finance"
GST Live Certification Course (39th Batch) - April 2024 (Weekend Batch) (With Certificate)
CAclubindia
