Depri. on hire purchase assets
This query is : Resolved
14 April 2010
Can we claim depreciation on hire purchase transaction ?. If yes, then how to do accounting i.e. under which A.S.?
Can we claim depreciation on hire purchase transaction ?. If yes, then how to do accounting i.e. under which A.S.?
14 April 2010
The 1943 Circular of the Department allows depreciation in case of hire-purchase to the hirer of the asset. You can refer Board Circular No.9 dt. 23-03-1943, this governs the tax treatment of such cases. You can also refer to Case-Law of Karimjee (P) Ltd Vs. ITO 15 SOT 128 (Mum).
Inspite of the old Circular, there have been problems once in a while in claiming depreciation. There have been problems on the part of the hirers in getting depreciation allowed; and there has been a unique case where the financier has claimed depreciation in a hire-purchase transaction [A P Paper Mills].
However, in general, Departmental circulars are understood as binding on lower tax authorities, and therefore, the Circular can be safely treated as decisive.
Inspite of the old Circular, there have been problems once in a while in claiming depreciation. There have been problems on the part of the hirers in getting depreciation allowed; and there has been a unique case where the financier has claimed depreciation in a hire-purchase transaction [A P Paper Mills].
However, in general, Departmental circulars are understood as binding on lower tax authorities, and therefore, the Circular can be safely treated as decisive.
14 April 2010
SHIVANG JI,
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NO NEED TO THANK WE ALL ARE HERE SHARE OUR KNOWLEDGE AND EXPERIENCE.
HAVE A NICE DAY.
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