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Partner buy a car in Partnership firm as an Individual

Ketan (Services ) (120 Points)

02 July 2009

HI needed to know, can i buy a car in My individual Name where the cheque is paid by my partnership firm, where all the expences / maintainence and the depriciation shall be claimed by my firm.

---- Can that sepcific amount be treated as tax free Loan given to Partner, (other loans continue to get Interest)

--- At the time of sale of the Car do i have to sell in Individual name (without VAT and the remitence deposited in the Company) or does the company sell the car with VAT @ 12.5%???

THnx...

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5 Replies

Piyush Jain (CA) (283 Points)
Replied 02 July 2009

yes, you can buy the car in your name where beneficial owner is the firm. Instead of taking the interest free loan make the payment from the firm itself.

At the time of sale cap gain will arise to firm and yes VAT would be applicable.

The firm will be the beneficial owner.

Regards

Piyush

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Anumanchipalli Sathikonda (Tax Consultant) (1559 Points)
Replied 02 July 2009

Mr.Ketan

and

Mr.Piyush Jain

Please refer section 14 of the Indian Partnership Act, 1932. Your doubts will be clarified. Though the car is purchased in the name of a partner, it can be treated as the asset of the firm and the firm can claim deprectiaiton.

With Best Wished

Sathikonda

Anumanchipalli Sathikonda (Tax Consultant) (1559 Points)
Replied 03 July 2009

Mr.Ketan

and

Mr.Piyush Jain

I am herewith attaching a list of case laws use for you in the matter of claiming depreciation on vehicle registered in the name of a partner.

Best Wishes

Sathikonda

Attached File : 2 depreciation on vehicle registed in the name of the partner.doc downloaded: 2067 times

Ketan (Services ) (120 Points)
Replied 03 July 2009

Originally posted by :sathikonda anumanchipalli
"	Mr.Ketan and Mr.Piyush Jain I am herewith attaching a list of case laws use for you in the matter of claiming depreciation on vehicle registered in the name of a partner. Best Wishes Sathikonda	"

Thanx a lot Mr. Piyush & Mr. Sathikonda... To sum it all

I Shall buy a car in my name Payed by my Firm, who can claim the Depriciation & maintainence, @ at the time of sale the car shall be sold by the Firm with VAT at the prevaling rate.