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Depreciation calculation

Others 210 views 3 replies
in case business is transferred to son by father, how to calculate depreciation and who will claim it?
Replies (3)
Please elaborate your query
If transfer implies just mere transfer of management or Son just replaced father to look over the business activities, then depreciation will be claimed by father only.

But If u mean by business transfer as transfer under income tax act i.e before transfer ITR is filed in name of Father with father's pan and after transfer ITR is going to be filed in Son's name and pan then Depreciation is to be calculated till the date of transfer and to be claimed in Father's ITR. And depreciation from the date till the end of the year to be calculated and to be claimed in Son's ITR.

First of all if you mean transfer of ownership by the word transfer of business, then you first need to show transaction under your dad's income tax return as slump sale and file report from chartered accountant in Form 3CEA. By this way, you can get all of your dad's business assets as well as liability transferred to your business and you can claim depreciation on the assets that earlier belongs to your dad's business.

If its just change in management without change in ownership, your dad will continue to report business income under their ITR and you need to plan your income either as salary, professional fees or otherwise.

Regards,

Mano


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