Can a partnership firm claim the service expense of the partner's car as an expense in the books of the firm..? Car is used for personal purpose only. The invoice is issued in firm's name. What to do.?
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Quick Summary
This discussion explores whether a partnership firm can claim the service expenses for a partner's car, especially when used only for personal purposes. The consensus is that if the car is registered as an asset in the firm's books, expenses can be claimed, but a portion will be disallowed for tax purposes due to personal use. If the car isn't a firm asset, the expense generally cannot be claimed by the firm.
If the car is recorded as an asset in the books of firm, then claim the expense and disallow 20% of the expense as per the act for personal use while computing tax. If car is not an asset in the books, then you can't claim.