RAJ KUMAR (FINANCE MANAGER) (1393 Points)
11 September 2011HELO FRIENDS, PLS. TELL ME. IF A PRTNERSHIP FIRM PURCHASES THE CAR BUT CAR IS ON THE NAME OF THE PARTNER. DOWN PAYMENT IS MADE FROM THE FIRM CURRENT A/C. INSTAL;LMENT IS GOING FROM THE FIRM CURRENT A/C.
CAN HE CAPITALISE THE CAR IN THE BOOKS OF THE FIRM AND ALSO LOAN A/C AND CLAIM DEPRECIATION.
IF YES WHAT EXTRA I HAVE TO DO WHETHER AN UNDERTAKING IS REQUIRED FROM THE PARTNER.
PLS. HELP ME.
praveen
(Chartered Accountant)
(6971 Points)
Replied 11 September 2011
Yes, the car can be brought into the firm as capital of the partner.
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RAJ KUMAR
(FINANCE MANAGER)
(1393 Points)
Replied 11 September 2011
BUT I CANT INTRODUCE AS A CAPITAL CONTRIBUTION BECAUSE DOWN PAYMENT OF 3 LAKH IS MADE FROM THE FIRM A/C. AMD IT ALSO ATTRACTS CAPITAL GAIN PROVISIONS.
SO, PLS. TELL ME CAN I INTRODUCE CAR IN THE BOOKS AS IT IS. BECAUSE IT IS USED FOR THE FIRM BUT THE MAIN PROBLEM IS THAT IT IS PURCHASED ON THE NAME OF PARTNER.
PLS. TELL ME.
Prakash
(Chartered Accountant)
(560 Points)
Replied 11 September 2011
It can be Resolved by Trasfer Entry through Partner Current Account (Not capital Account)
Say For Example CAR Value, 10,00,000, Down Payment, 3,00,000, Loan Amount 7,00,000
Pass the entries as follows
CAR A/c Dr 10,00,000
To Partners Current A/c Cr 10,00,000 (Aquisition Value)
Partners Current A/c Dr 3,00,000
To Bank A/c Cr 3,00,000 (Down Payment)
Partners Current A/c Dr 7,00,000
To CAR Loan Account Cr 7,00,000 (Loan Amount)
Net Effect No balance in Partner Current a/c, CAR recorded in Books along with Loan and Down Payment
Capital Gains for Partner
Though we presented like above it amounts to Transfer of Capital Asset to Firm , which attracts Capital gain tax
But he need not pay anything because As per Sec 45(3) of Income Tax Act the sale consideration would be the amount recorded in the books of Firm
We are recording at purchase value only, so no gains on such transfer
We can also defend like this
Net amount paid to Partner is Nil as he is transferring both asset and liability, so No consideration , no tax
So record as specified above nobody will question
Prakash
(Chartered Accountant)
(560 Points)
Replied 12 September 2011
I'm withdrawing a part of my comment from Here
"We can also defend like this
Net amount paid to Partner is Nil as he is transferring both asset and liability, so No consideration , no tax"
As agreement to pay for a debt also amounts to consideration
Remaining you can go for it 
RAJ KUMAR
(FINANCE MANAGER)
(1393 Points)
Replied 13 September 2011
CAN I PASS ENTRY LIKE THIS, IS THERE ANY PROBLEM TO INCOME TAX DEPARTMENT.
PLS. REPLY ME.
Prakash
(Chartered Accountant)
(560 Points)
Replied 13 September 2011
Yes I bet, you can pass comfortably !! 
GSTR 9 and 9C for FY 23-24 as amended by Notification 12/2024 dated 10th July 2024(with recording)
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