In case a proprietor sells his car on 16-12-2011, is he eligible to claim depreciation for the financial year 2011-12 under Income Tax Act, 1961 at the rate of 15% for using the car for more than 180 days during the financial year?
Please clarify.
Ram CA (Student) (50 Points)
16 December 2011In case a proprietor sells his car on 16-12-2011, is he eligible to claim depreciation for the financial year 2011-12 under Income Tax Act, 1961 at the rate of 15% for using the car for more than 180 days during the financial year?
Please clarify.
nitin suvarna
(C.A FINAL)
(828 Points)
Replied 16 December 2011
under income tax ,we work under the block concept ,so accordingly if there are more than 1 asset in the block & also some wdv value on the last day of f.y u will be eliglble for depreciation at full rate on the wriiten down value.
regards,
nitin
CA Ketan Waghela
(Partner at Elite Educare)
(356 Points)
Replied 16 December 2011
Ram ji,
Yes, you can claim depreciation for full year. If you have block and wdv in that block as on 31.03.2011 you can claim full depreciation on that block even if you have sold 1 asset of that block immediately after 180 days of use.
Ram CA
(Student)
(50 Points)
Replied 16 December 2011
Mr. Ketan,
My doubt is - will there be any eligiblity for the proprietor to claim depreciation only on car that is sold after it was used for more than 180 days during the year?
CA Ketan Waghela
(Partner at Elite Educare)
(356 Points)
Replied 16 December 2011
Ram ji,
If you have block of 1 motor only which is sold, you can not claim depreciation on it, because block does not exist on 31/03 at the year end. We provide depreciation on the block of asset on its WDV in the year end.
Realise profit or loss directly in the P/L account without charging the depreciation.
you can charge depreciation as per Companies Act in the books but not in Income tax.
hope it has cleared your doubt.
CA LALIT WADHWA
(FRESHER)
(105 Points)
Replied 16 December 2011
depriciation is calculated at the end on wdv of d block...so amount of sale will not provide any depriciation...
CA Kiran Sutrave
(CA)
(428 Points)
Replied 17 December 2011
If the proprietor had a car in FY 2011-2012 and it is sold during the Financial Year then there is no asset in that block and hence depreciation can not be claimed on it.
Instead Capital Gain is to be calculated since there is no asset in existence in that block during the Financial Year.
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