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Query regarding depreciation on assets

Tax queries 277 views 1 replies

Aravind Kannan

Future CA

155 Points Posted on 18 May 2017

Hello Friends,

I need your help !

Regarding claiming of deprecation in the case of LLP

Partners’ are also owning fixed assets like computer, printer etc bought in their name before the formation of LLP and have been using it for personal use. From the income tax point of view, an asset should be purchased in the name of the LLP to claim lawful depreciation right? But in this case, can the partners’ bring in or sell their assets to LLP at a nominal price to LLP through meeting and recording it in minutes, the type and value of assets sold. Can this be taken as the cost of the asset and depreciation be claimed on that asset for income tax purpose? Or is it necessary that only original purchase of assets in firm’s name is allowed?

Can the partners’ also sell the assets for which they don’t have the original bills purchased by them?

Thanks in Advance :)

Replies (1)

CA PRADEEP C B

Prop: Pradeep C & Company Chartered Acc

166 Points Posted on 19 May 2017

In income tax poiny of view, LLP is equal to Partnershi firm. Partners to LLP and LLP are different persons.
Partners of LLP may brought assets into LLP ;
value = the value at which these assets are recorded in the books of LLP.
If assets are in non cash nature = these assets will be valued by a CA and that value will be recorded in the books of LLP.

There is no need to purchase assets in the name of LLP to claim depreciation as conversion assets into LLP'S name is available. Depreciation is same as in case of partnership firm.

Partners can sell their personal assets, which have no bill of purchase. since they are persons different from LLP , this transaction never come under tax computation of LLP.
Assets of LLP which have no purchase bills can be sold by its partners only as agents of LLP not in their personal capacity.

please read articles relating to taxation of LLP.