13 June 2009
Circular no 9 dated 23.03.1943 gives right to the hirer to claim depreciation so whether expenses for repairs incured by the hirer would be allowed as deduction.And kindly also explain the difference between installment purchase and hire purchase.
13 June 2009
Yes you are correct any revenue repairs incurred by hirer allowed as business expenses.
While in Hire Purchase system, the title before you pay the last installment, remains with the Hirer (i.e. one who gives something on HPS). Installments paid are considered as payment towards the usage of the article hired, until the last installments. If you default in paying even the last installment, the hirer can take away the article, without having to repay any installment or part thereof to the seller . Only after the payment of the last instalment, the ownership (title) to goods pass on to the hiree.
In case of Installment option, the title to goods is considered to have passed to the seller on the payment of the first installment only. Every installment is considered to be the payment towards the value of the goods and not for the usage alone. In case of default seller can enforce the hiree to sell the product and make good the remaining installment. But the hirer cannot claim a good title to the goods.
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