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partnership

Sowmya.S.Balan (Paid Assistant) (749 Points)

11 February 2010

Car purchased in the name of partner and partially used for business. Whether firm can derive benefit of depreciation on this car and other expenses of car

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7 Replies

Amir (Learner) (4016 Points)
Replied 11 February 2010

Dear Sowmya,

Partner has to bring the Car as his capital contribution in the Firm.

Where partner of firm transferred vehicle registered in his name to the firm as his capital contribution to the firm, depreciation is allowable to the firm even though the vehicle continued to remain in the name of the partner in the transport department records - CIT v. Navdurga Transport Co. [1998] 149 CTR (All.) 219.,

Ashish Sharma (Service) (1028 Points)
Replied 11 February 2010

Amir Whats About Company if any Director is using its laptop for company but purchase by himself before incorporation

Amir (Learner) (4016 Points)
Replied 11 February 2010

Dear Ashish,

The laptop which u r talking about unless it is recognized as an asset by the company in its Books, Company cannot claim depreciation...

Ashish Sharma (Service) (1028 Points)
Replied 11 February 2010

Do we make payment for laptop to director for reconized it as an assets in company

Abhishek Sharma (B.Com PCC Student & Article) (115 Points)
Replied 11 February 2010

This Qs. hav 2 answer:-

1. If the Firm is Partnership then firm can claim only expenses not the depreciation of that car.BUT

2.If the Firm is proprietary then firm can claim both.

Aditya Maheshwari (CA in Practice) (35867 Points)
Replied 11 February 2010

Dear Ashish

The company can make payment for the bill of laptop which is in the name of the director. If the director has already paid for the bill then the company will have to purchase the same from the director and record the same as assets in the books and claim depreciation.

Max Payne (employed) (2574 Points)
Replied 11 February 2010

Dear Ashish, in addition to what aditya sir has said,

in case laptop is transferred to company, explanation 3 to sec 43(1) shud also be considered...

Normally we will record the gross value of the asset as what we are paying to the director as the purchase price and claim depreciation on that price, but IT dept has seen some room for misuse of the depreciation provision and inserted this explanation......

Explanation 3.

Where, before the date of acquisition by the assessee, the assets were at any time used by any other person for the purposes of his business or profession and the Assessing Officer is satisfied that the main purpose of the transfer of such assets, directly or indirectly to the assessee, was the reduction of a liability to income-tax (by claiming depreciation with reference to an enhanced cost), the actual cost to the assessee shall be such an amount as the Assessing Officer may, with the previous approval of the Joint Commissioner, determine having regard to all the circumstances of the case.