Depriciation provision

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

25 August 2013 Dear Sir,

One of our assesse, running his business under proprietorship up to
06.12.2012. He has formed a partnership firm and taken over all his running
businesses including all of assets & liabilities of the proprietorship firm
in to the partnership firm.

Our query is how to charge the depreciation in financial statements of 2012-2013 in the proprietorship business and in the partnership firm. Both are under audit.

If You Please have any Judgement Case , then Please send that also for more consideration.

Kindly suggest.

>Regards

Mohit

+91 8901538621

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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25 August 2013 The status of the business entity has been changed. It is the case of transfer of assets by the proprietor (Individual) to the firm. Proprietor can not claim depreciation though the firm will be eligible to do so.
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Individual will show ST capital gains/loss
on the basis of amount credited to his capital account in the firm in respect of the depreciable assets. The Opening WDV would be his cost of acquisition. Section 45(3).

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Firm will claim depreciation as per Section 32(1)(ii). If assets are used less than 180 days by the firm 50% depreciation will be allowed.