Proprietorship firm liable for Tax Audit is having various fixed assets in balance sheet which are solely for personal use of proprietor.
My query is since the above fixed assets are not eligible for depreciation u/s 32,is it required to fill clause 18 of Form-3CD?(If yes then should we only enter book value of assets and enter 0 in depreciation column)
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44AB-Query on Depreciation
Replies (7)
Since those personal assets are appearing in Balance Sheet,
one way is to remove those assets from Balance Sheet.
Second option is to provide depreciation as usual and disallow that much depreciation in computation of business income.
one way is to remove those assets from Balance Sheet.
Second option is to provide depreciation as usual and disallow that much depreciation in computation of business income.
If personal assets including in business balance sheet then provide depreciation and same will be disallowed...
1. If the same is used for personal purpose, it shouldn’t have been part of BS in the first place. The correct approach would be to remove the above assets from BS.
2. In the current year if the same is not entirely utilized for the purpose of business or profession, then as per sec 38(2) the same will be disallowed.
3. In your case if the assets are proportionately used for personal and business purpose then it will be allowed to the extent they are used for business purpose. Otherwise, the entire amount will be disallowed.
Please correct me if the above solution has an alternative view.
Yes... I agreed to Mr Suresh Thiyagarajan.
Dear Sirs,agreed that the assets should not be part of Business Balance sheet in first place.However pls guide if the below approach is correct:
1)The Assets will remain in balance sheet as they are and no depreciation will be provided on the same in the books.Can we follow this approach?
1)The Assets will remain in balance sheet as they are and no depreciation will be provided on the same in the books.Can we follow this approach?
Better to remove the said assets in balance sheet
Charge depreciation and disallow the same u/s 38(2).
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