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Live Stock ????

Samiksha (Articles) (345 Points)

14 October 2010

One of our client is Trust and having catels as a live stock in the hostel maintained by them. what will be the treatment as per IT act regarding the WDV or depriciation on such assets???

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9 Replies

FATEMA (CHARTERED ACCOUNTANT) (719 Points)
Replied 14 October 2010

Dear Samiksha,

The livestock will appear as fixed asset in your balance sheet but you cannot claim depreciation on livestock under the income tax act.

Regards,

Fatema

Samiksha (Articles) (345 Points)
Replied 14 October 2010

Originally posted by : FATEMA
	Dear Samiksha, The livestock will appear as fixed asset in your balance sheet but you cannot claim depreciation on livestock under the income tax act. Regards, Fatema

but what to do when they die.

FATEMA (CHARTERED ACCOUNTANT) (719 Points)
Replied 14 October 2010

Does the trust earn any income from the herd of cattles?

Ankit Mundra (CA Final Student B.Com L.L.B. (3rd Year)) (129 Points)
Replied 14 October 2010

No Depreciation on live stock.

and when they die... just reduce the amount which was added at the time of their purchase.

the income earned by the live stock is to be disclosed properly under the IFOS head ( you cannot add it in Business/Profession Income because you mentioned that the live stock are in hospital and i'm sure that the main business of the hospital is not to earn from cattle outputs)

Please Correct me if you feel i'm wrong...

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Samiksha (Articles) (345 Points)
Replied 14 October 2010

Originally posted by : FATEMA
	Does the trust earn any income from the herd of cattles?

No they wont earn any income form such catel. but as from long back they are just keep adding in the assets and it newer gor reduced on the death of it and sale of it.

CA Sandeep Kumar (Audit Assistant) (804 Points)
Replied 14 October 2010

hi,

Please refer to section 36 (1) (vi) of the Income Tax Act, 1961.

It very clearly states that in case the animals are of not any use to the assessee, expenditure can be claimed fully, i.e cost incurred-realisation on carcasses or animals.

As regards depreciation, there is no specific allowance as such. But anyways u can claim full cost as expense, question of depreciation should not arise/. (provided conditions satisfied in sec 36(1)(vi).

CA Sandeep Kumar (Audit Assistant) (804 Points)
Replied 14 October 2010

Hi,

In my previous mail, i have mentioned section 36(1)(vi), please note that it is not applicable in case of trusts. As regards treatment, any expense which will assist in attaining objects of the trust should be allowed as expenditure.

CA Himanshu Bansal (Risk Manager) (2345 Points)
Replied 15 October 2010

Originally posted by : Ankit Mundra
	No Depreciation on live stock. and when they die... just reduce the amount which was added at the time of their purchase. the income earned by the live stock is to be disclosed properly under the IFOS head ( you cannot add it in Business/Profession Income because you mentioned that the live stock are in hospital and i'm sure that the main business of the hospital is not to earn from cattle outputs) Please Correct me if you feel i'm wrong...

K.P.Rajashekar (CA Business) (24 Points)
Replied 11 October 2016

Income Tax Appellate Tribunal - Mumbai

Ruia Stud And Agricultural Farms ... vs Sixth Income-Tax Officer on 30 May, 1985

Equivalent citations: 1985 14 ITD 429 a Mum

Bench: V Balasubramanian, Vice, Y Meena

ORDER V. Balasubramanian, Vice President

Income Tax Appellate Tribunal - Mumbai Ruia Stud And Agricultural Farms ... vs Sixth Income-Tax Officer on 30 May, 1985 Equivalent citations: 1985 14 ITD 429 a Mum Bench: V Balasubramanian, Vice, Y Meena ORDER V. Balasubramanian, Vice President

As regards the claim of Rs. 18,000 on .account of the death of a horse purchased during the year irrespective of what is stated earlier, the assessee would be entitled to the benefit of Section 36(1)(vi). The fact that if this horse had continued living in the succeeding year on the basis of being treated as a plant, depreciation would be granted, would not disentitle the assessee to the relief under Section 36(1)(vi), insofar as, there is no restriction on such grant noted in this section. The sum of Rs. 18,000 is, therefore, to be allowed as deduction. The ITO could, however, check up whether in respect of this horse any corpse value is realised, if so, that has to be deducted from the above Rs. 18,000.