Depreciation benefit

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Srimanth (Querist)
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11 January 2013 In case of an housing society the developer/builder has transferred the assets like ELEVATORS,GENERATORS,SEWAGE TREATMENT PLANT ...ETC to the collective buyers of the flats of the housing society.so now my query is can the housing society claim depreciation benefit against those assets ??

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Anil Sankar V

Anil Sankar V (Expert)
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11 January 2013 do the have income from b& p?

Srimanth

Srimanth (Querist)
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12 January 2013 NO they don't have any income from B/P

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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21 July 2024 In the context of a housing society where assets like elevators, generators, sewage treatment plants, etc., are transferred by the developer/builder to the collective buyers (residents) of the flats, the ability to claim depreciation benefits depends on the ownership structure and the nature of the society:

1. **Ownership of Assets:**
- For the housing society to claim depreciation on these assets, they must legally own them. Ownership is typically transferred to the housing society once it is formed and registered.
- If the assets are jointly owned by the society members or are managed collectively, and if the society is the legal owner, then depreciation can be claimed.

2. **Income Generation Requirement:**
- Under the Income Tax Act, depreciation is allowed on assets used for business or profession, including income-generating assets.
- Housing societies are typically not considered to be engaged in business or profession solely by virtue of managing common amenities for residents. Therefore, if the assets are used exclusively for the benefit of the residents without generating any income, depreciation may not be allowable under the Income Tax Act.

3. **Exception for Commercial Activities:**
- If the housing society engages in commercial activities or earns income (e.g., renting out facilities to outsiders, leasing amenities, etc.), then depreciation on such income-generating assets might be allowable to the extent they are used for these purposes.
- However, if the primary use of the assets is for the benefit of residents without any commercial exploitation, depreciation benefits may not apply.

4. **Documentation and Compliance:**
- If depreciation is claimed, it should be supported by proper documentation, including ownership records, asset registers, and usage logs.
- Any claim for depreciation should comply with the provisions of the Income Tax Act and be disclosed appropriately in the society's financial statements and tax returns.

In conclusion, whether a housing society can claim depreciation on transferred assets depends on the ownership status, usage for income-generating purposes, and compliance with tax regulations. If the society solely manages these assets for the benefit of its residents without generating income, depreciation benefits may not be available under normal circumstances. It's advisable to consult with a tax advisor or accountant familiar with housing society taxation for specific guidance tailored to your situation.