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Q. > Please Help: INCOME TAX AND AUDITING
A DIRECTOR PURCHASED A CAR IN DEC,10 IN HIS NAME DUE TO TAKE SOME BENEFIT OF DICOUNT IF PURCHASED IN INDIVIDUAL NAME BUT THE CAR WHOLLY USED FOR THE COMPANY PURPOSE AND ALSO PAYMENT OF CAR LOAN IS FROM COMPANY'S ACCOUNT. SO PLZ TELL WHETHER DIRRECTOR IS RIGHT TO SAY THAT THIS IS COMPANY'S FIXED ASSETS AND SO TO BE SHOWN IN FIXED ASSETS OF THE COMPANY AS WELL AS LOAN ALSO IN COMPANY NAME. CAN CO. TAKE DEPRECIATION ON CAR VALUE? PLZ GIVE THE ADVICE IF POSSIBLE.
answered Sep 02, 2011 by Ashish Karundia , New Delhi
Dear Sandeep,
The Company cannot claim the depreciation even if the payment of the car loan is made by the Company as the ownership of the car is in the name of the Director.
However, the Director can sell the car at the same price to the Company and then the Company can claim depreciation on the same.
Hope the same clarifies the position.
answered Sep 02, 2011 by Ashish Karundia , New Delhi
Dear Sandeep,
You can enter into an agreement in the nature of rent/lease etc and can claim the expenditure. However, the same shall have TDS implications depending upon the agreement drafted.
Further, the ownership of the asset is must to claim depreciation.
answered Sep 03, 2011 by Neha Jain
Yes, Ashish is right that company can not claim depreciation and show as its Fixed Asset in its Books unless and until ownership of car is not transferred to company's name.
Experts Panelist
Comments
Balram
02-Sep-2011 , 05:19:59 pmSir,The Company can't claim the depreciation,beacouse the car is not assets of company.
CA SANDEEP AGGARWAL
02-Sep-2011 , 06:43:40 pmwhether there is no way to create MOU to transfer property in co. without transfer rc..
CA SUBHASH KR.
04-Sep-2011 , 05:17:50 pmI am totally agree with Ashish that the company can not claim depreciation and show as its Fixed Asset in its Books unless and until ownership of car is not transferred to company's name.
CA SANDEEP AGGARWAL
08-Sep-2011 , 11:56:45 amTHANKS A LOTT OF ALL OF YOU DEARS.