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Income tax

22 September 2011

Mr.A has got a Car worth Rs.10Lacs on his marriage.He bringing that Car to his proprietory own business.Whether he is eligible to claim depreciation ? If so what is opening WDV ?

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8 Replies

sumit jain (.) (844 Points)
Replied 22 September 2011

yes he is eligible to claim depreciation and the opening wdv should be 10lacs

(correct me if i m incorrect)

CA.Karthikeyan G (M.Com) (201 Points)
Replied 22 September 2011

Plz justify if u have some case law in hand.Becoz am getting number of different answers from freinds and CA's for this doubt.

CA.Karthikeyan G (M.Com) (201 Points)
Replied 22 September 2011

Mr.A has got a Car worth Rs. 10Lacs as a gift on his marriage.He bringing that Car to his proprietory own business.Whether he is eligible to claim depreciation ? If so what is opening WDV ?

sumit jain (.) (844 Points)
Replied 22 September 2011

sorry i didnt notice that

Vikas (CA) (1135 Points)
Replied 23 September 2011

In my view, the value should be Rs.10,00,000/-. In his personal balance sheet, he might show this as Motor Car Account Dr. To Capital Account. Accordingly the entry in his business books can be passed. I derived this conclusion from the point as the figure in case of cash gift is also shown as a part of ur balance sheet i.e., cash / bank addition, then similarly why cann't it be addition of a fixed asset. But, he should maintain the receipt of the car purchased and the gift deed for further assessment procedures...

(Guest)

yes cost will be your actual cost of car as explanation explanation 5 to sec 43(1) is specific about personal aseets bought to bussiness but dat is only about building so other assets will be at actul cost.

CA Vishal kapoor (Partner) (320 Points)
Replied 23 September 2011

HI,

According to Explanation 2 to sec 43 (1) , Where an assest is acquired by the assessse by way of gift or inheritance, the actual cost to the assessee shal be the actual cost to the previous owner as reduced the depreciation actually allowed on the asset and the amount of depreciation that would have been allowable to the assesse .

In your case you got a Car as a gift, so the actual cost for you is RS 10Lac which the cost of the previous owner.

1 Like

CA. Roopali Kadam (Jobs on assignment basis.) (1453 Points)
Replied 23 September 2011

Originally posted by : CA Vishal kapoor
	HI, According to Explanation 2 to sec 43 (1) , Where an assest is acquired by the assessse by way of gift or inheritance, the actual cost to the assessee shal be the actual cost to the previous owner as reduced the depreciation actually allowed on the asset and the amount of depreciation that would have been allowable to the assesse . In your case you got a Car as a gift, so the actual cost for you is10Lac which the cost of the previous owner.