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Vehicle depreciation

Partap (Head) (26 Points)

04 July 2011

Hi,

We have a car in the name of one of the directors of the company, that is primariy used as the official car. How can the company get depreciation on this vehicle? Someone sugggested me the following method: Is this ok?

The company can pay a downpayment (to the director) and then keep paying the EMIs (to the directors account) till the car loan is cleared. A contract on a legal stamp paper is signed and all transfer papers are signed but actual transfer of Registration takes place only after the time the loan gets cleared.

Please suggest if this ok or is there any other method that can be used.

thanks a lot

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5 Replies

Kshitij (Consultant) (62 Points)
Replied 04 July 2011

the director hav 2 trf the car in the name of the company nd den dep can b claimed til tat time co. can credit the director a/c nd wen the loan is repaid co can pay the amt to the director....

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Partap (Head) (26 Points)
Replied 04 July 2011

Thanks for your reply!!

So now it comes down to what constitutes a transfer? Physical control and agreement or the registration sertificate is a must?

thanks

Paras (Mcom,CA Final) (122 Points)
Replied 04 July 2011

Sir in income tax the legal title is not important . important is that who is paying for the vehicle .Company can claim depreciation.

1 Like

CA Saiyum khan (Practicing CA) (690 Points)
Replied 04 July 2011

Comany can claim the depreciation if the company has paid consideration towards the acquisition cost of the vehicle even if it is not registered in the name of the company. That means if Company has passed the resolution in board meeting to purchase the car in the name of Director and make the payment then it can legally claim the depreciation.

1 Like