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Is loss on sale of car allowable as expense as per it

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venkataraju

CA Student

60 Points Posted on 09 February 2013

Please clear Doubt which i have.Urgent

I have a doubt that Mr.X has a car(suppose-477190) and also he has loan(Suppose-210000) on that car.New car hasbeen purchased in the name of his Wife Mrs.X (cost of new car (suppose-660000) with exchange of Mr.X Car(suppose value-110000) and Taken New car loan in the name of Mrs.X(Wife)(Suppose-450000).What would be tax treatment in the books Mr.X and Mrs.X(wife).whether interest on old Car loan(in the name of Mr.X(Husband)) , Depreciation on old Car and Loss on Exchange for old car(477190-210000=267190) is allowable as expense as per IT in the books of Mr.X(husband) .What should be the treatment in the books of Mrs.X(Wife).

Replies (1)

C.A. Jignesh N. Mehta

C.A.

1030 Points Posted on 10 February 2013

In your above question, you have not mentioned the actual usage of the car of Mr X and that of Mrs X.

Assume that the car is used for business purpose than the interest on car, loss calculated in terms of Block of assets method will be allowable as deduction.

In hands of Mrs X, the cost of car would be same Rs. 6.6. Lacs

Assuming that car was used for personal purposes than no expenses are allowable whether interest / capital loss.