Prem Kumar (Articled student--Final) (375 Points)
17 February 2009Hi......
Can any one let me know how to deal with the asset when it is purchase on hire purchase basis.
1. Can we deduct the interest on hire purchase as deduction
2. can we claim depreciation on the asset u/s 32 only on the cost of the asset
its urgent plz help me in this regard
thank you in advance
CA. Ashok shah
(CHARTERED ACCOUNTANT)
(333 Points)
Replied 17 February 2009
Hire Purchaser is entitled to depreciation in case of property taken on Hire-Purchase. The amount of rentals paid by the Hire-Purchaser is apportioned between the capital amount paid to obtain the ownership of the assets and income payments in respect of its hire charges. 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).
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