Depreciation on car

This query is : Resolved

Ashish Swar (Querist)
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17 August 2013 Respected Sir/Madam,

If the car is Registered on the name of director..can company claim depreciation...

Is it appropriate from Income Tax Point of view..

CA Kumar Mukesh

CA Kumar Mukesh (Expert)
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17 August 2013 To claim Depreciation on any fixed asset cost of Acquisition is relevant under section 43 (1)

However to claim Depreciation under Income Tax on Car Company can opt to make a sales/Transfer deed at Appropriate Market value of Car on the date of Transfer.

However Car Running & Maintenance Expenses can be claimed without giving any effect of Transfer Deed

Ganeshbabu K

Ganeshbabu K (Expert)
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17 August 2013 As per income tax act Depreciation not allowed if car was registered in the name of Director.

Citation:- Edwise Consultants (P.) Ltd. - [2013] 35 taxmann.com 149 (Mumbai - Trib.)

Whether, merely because cars were shown as assets in books of account of assessee company, depreciation could not be allowed where cars were registered in name of its directors..

Thanks & regards
Ganesh babu k

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CA Kumar Mukesh

CA Kumar Mukesh (Expert)
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17 August 2013 To get Depreciation under section 32, asset(s) must be used in business of Assessee Company, it doesn't make compulsory that assets should be registered in the name of Assessee.

If its proved in Court of Law then revenue cannot deny to claim depreciation on Asset

The same case is already decided in The Supreme Court, in CIT v. Podar Cement P Ltd. (1997) 226 ITR 625
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Also in Delhi High Court, CIT v. Smt. A. Sivakami and Another (2010) 322 ITR 64

Ganeshbabu K

Ganeshbabu K (Expert)
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17 August 2013 kumar ji

Case study provided above was held in 2013

So i will go with the same...what ever be the stand of this issue in before 2013 where as it is recently provided case law...i would like to rely on this..
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I stand on my opinion that it is disallowed

Opinion was given with my understanding of tax provisions and cited case laws

CA Kumar Mukesh

CA Kumar Mukesh (Expert)
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17 August 2013 Ganesh G

Years of both cases are correct

Please go with below mentioned link

http://220.227.161.86/26941bos16384DTL.pdf

last we have already discussed enough over this query

let discuss another query

Ganeshbabu K

Ganeshbabu K (Expert)
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17 August 2013 I mean to say Citation provided by me was latest one which is held in 2013

CA Kumar Mukesh

CA Kumar Mukesh (Expert)
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17 August 2013 Sorry for wrong interpretation

But Judgement of Supreme Court are always prevail

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Ganeshbabu K

Ganeshbabu K (Expert)
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17 August 2013 Yes...
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nice to have this discussion..lets see some body will confirm the same
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If that is the case i can say case provided me was latest one (2013 april),,more over it is held by Mumbai ITAT

CA SURENDRA KUMAR RAKHECHA

CA SURENDRA KUMAR RAKHECHA (Expert)
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18 August 2013 In my opinion; if the car has been purchased in the name of the director and one resolution is passed that the "real ownership" is with the company which has paid its cost/loan instalments by cheques
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the same be used by the company only and in future whenever it would be sold out;
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the proceeds be deposited with the company by the director.
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Further the director will use it for the company's business exclusively.
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Although the following discussion is relevant.
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http://www.skpgroup.com/newsletters/tax-alerts/skp-tax-alert-VI-7-Depreciation-on-motor-cars-registered-in-the-name-of-directors.html
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In my opinion; the above case was not PROPERLY REPRESENTED by the counsel.

Many times what practice is generally followed by the public is taken/misunderstood as acceptable in law.
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