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Can Depre. be Claimed ???

Mayank Shyamsukha (CA FINAL) (119 Points)

20 March 2010

Hi,

I have a query as follows:

A partner ship firm has a block of assets of Plant and Machinery and there is only one car in the said block for the Previous Year 2008-09. The Opening WDV Is Rs. 350,000 and in the month of December 2009, unfortunately the car was stolen and claim was made to the insurance company and in the month July 2009, the claim of Rs. 225000 was received from the Insurance Company as full and Final Settlement.

Now my query is, whether a firm can claim depreciation in PY 2008-09 because the car was in use for the business for 9 months and what for the Insurance Compensation received whether is it taxable ?

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7 Replies

rahul pandit (Article Assistant) (53 Points)
Replied 20 March 2010

i think in the F. Y. 2008-09 the depreciation shd be claimed on the closing WDV as we have not recd. any claim from Insurance company. But when we have recd. the claim of Rs. 2,25000/- we need to show short term capital loss of the excess amt. which will be 350000*15% = 52500 so the opening wdv will be 350000-52500= 297500 so, Rs. (297500-225000) = 72500 will be the STCL.

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CA Shiv (Business Controller) (2987 Points)
Replied 20 March 2010

Agree with rahul....

Insurance recd is not table in IT.

Depreciation willl be provided for whole year.

Loss is debited to profit and loss account and further at time of calculation of Tax, it is disaalowed and showed as STCLoss......

Mayank Shyamsukha (CA FINAL) (119 Points)
Replied 20 March 2010

Dear Rahul Pandit,

How there can be STCL in the next year because sec-50 require that when all the assets are transferred then only the sec 50 will attract and sec-43(6) which says WDV Canot be reduced because of THEFT incident and hence neither sec 50 nor sec 43(6) will apply. then can depre be claimed in P Y 2009-10.