My client has won a Car valued at Rs. 40 lac in a lucky draw with HT Co. and has deposited TDS amount Rs. 1236000/- from his own business bank a/c with HT co. It is a lottery income for him.
The client has taken this car for his business use and debited Car a/c ( fixed assets) by the TDS amount deposited with HT co. Now, he has claimed depreciation on this amount.
Whether depreciation would be allowed in such an event.
According to me:
TDS is nothing but Income Tax and income tax is non deductible expenditure.
Accounting Treatment:
a) Of he debits the car a/c instead of income tax then whne u claim the same in his return as TDS then what would be the subsequent treatment is a question?
b) He actually needs to debit the Tax Deducted at Source (Asset) A/c or Capital A/c as the case may be instead of Car A/c
So in Short he cannot claim depreciation and accounting needs to be rectified
Dear Rajesh Sir,
Agree with Nicky Sir reply in the present case the treatment in the books is incorrect - Intstead of Car, TDS a/c should have been debited.
Car will be recognised at Nil Value - So Depreciation cannot be claimed.
CAclubindia
