Majid (Practice) (39 Points)
08 August 2012Assessee was doing job. He owns vehicle. After some years he starts his biz. Vehicle is now used in the business. Now, on what amout depreciation can be claimed on vehicle..?
llllVICTORllll
(Internal Auditor)
(511 Points)
Replied 08 August 2012
The fair value at which the the asset(vehicle is taken into balance sheet), so normally the fair realisable value of asset.
CA Sanjay Bag
(CHARTERED ACCOUNTANT)
(3340 Points)
Replied 09 August 2012
I am not agreed with Abhinav and Victor because as per Explanation 5 to Section 43 (1)of the Income Tax Act, 1961 the car should be taken at its original cost(i.e. the purchase price). You may refer Page No - 287 of Dr. V.K.Singhania Direct Tax Books (Forty Seventh Edition : December 2011)
llllVICTORllll
(Internal Auditor)
(511 Points)
Replied 09 August 2012
Hi Sanjay,
I didnot get singhania sir's referencer, but when i saw the bare act, i saw that explanation 5 of section 43(1) talks about transfer of building from a previous assessee to another assessee, please clarify the exact explanation you are talking about
THis is where i saw it
https://law.incometaxindia.gov.in/DIT/HtmlFileProcess.aspx?FooterPath=D:\WebSites\DITTaxmann\Act2010\DirectTaxLaws\ITACT\HTMLFiles\2010&DFile=section43.htm&tar=top#
and also in vakil No. 1 website
https://www.vakilno1.com/bareacts/incometaxact/s43.htm
CA Sanjay Bag
(CHARTERED ACCOUNTANT)
(3340 Points)
Replied 09 August 2012
llllVICTORllll
(Internal Auditor)
(511 Points)
Replied 09 August 2012
But sanjay, look at it from IT departments point of view, if a 5 year old vehicle taken at cost of fresh purchase of same 5 years ago to a business, the department is at loss of revenue, as asset which doesnot have the value it is being declared at, is being depreciated at high value for no logical reason. and if left unchecked, the firms and companies may start bringing personal asset(asset which were never part of depreciation by the selling party), to legally reduce taxable profit... right?
Department wouldnot let it happen, Logically the chance of such a rule is miniscule, but you will never know, i need to check the singhania referencer once again.
CA Sanjay Bag
(CHARTERED ACCOUNTANT)
(3340 Points)
Replied 09 August 2012
Point is not that what we are thinking, but the point is that what the relevant provision say. You also know there are several areas in the Income Tax where a person can get benefit of a expenses / deductions twice.
CAclubindia
