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Gift of car by father to daughter

Student (Others) (71 Points)

15 March 2016

Father has purchased the car on loan in daughter's name and has gifted the same to her on her marriage. However father is paying the EMI of the car. Can the father claim depreciation since he is paying the EMI? Can the payment of EMI be allowed as a deductible business expenditure?

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9 Replies

Amit M Bafna (74 Points)
Replied 15 March 2016

The ownership of the car is transferred to daughter hence father is not eligible for claimining depreciation and no deduction is available for paying EMI for the car.

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Swami Ayyappa Nuli (TAX ADVISOR & CONSULTANT AT G.S.T SUVIDHA CENTER) (1372 Points)
Replied 15 March 2016

Agree with Bafna

Bhakti Maru (Assistant) (26 Points)
Replied 15 March 2016

Only business expense are allowable as deductions & emi consists of principle component as well as interest component , so anyways car is not being used for business ,hence interest would b disallowed.

nagarajan (Accountant) (191 Points)
Replied 15 March 2016

Claiming of depreciation is based on the ownership and I agree with bafna.

sreekar reddy (hyderabad) (6 Points)
Replied 15 March 2016

Depreciation can only be claimed if you are owner of the property. This is upheld by the ruling authorities. Now, in you case since the ownership is transferred to your daughter, the daughter will only be eligible to claim depreciation not you , thought the EMI is paid by you.

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sandeep aggarwal (none) (23 Points)
Replied 16 March 2016

Here ownership remains with father only. But the interest part could have been allowed if car used in father'business. No deduction can be claimed.

CA Prateek Garg (CA in Practice) (1447 Points)
Replied 16 March 2016

Depreciation u/s 32 is allowable only when

-> Asset is owned, wholly or partly by the assessee, and

-> Used for the purpose of business or profession.

To claim depreciation both of the above conditions must be satisfied. However none of the above condition is satisfied in your case hence no depreciation allowable

Vishal Goel (Chartered Accountant) (1688 Points)
Replied 16 March 2016

CONDITIONS FOR CLAIMING DEPRECIATION:

Asset must be owned by taxpayer .
It must be used for the purpose of business or profession.
It should be during the relevant previous year.

It is not necessary that the taxpayer should be the registered owner of the asset for claiming deprecation.

But in your case asset is not used by you for business purpose dats y you are not allowed to claim deprecation.

CA Ashish Barthwal (Practising Chartered Accountant) (104 Points)
Replied 16 March 2016

If the car used by the daughter, for any purpose other than related to the business of father, depreciation is not an allowable expenses for father business. However, if the daughter is in the business of father, as a partner or member of HUF, depreciation is an allowed expense.