Vehicle depreciation

Tax queries 1059 views 5 replies

Partap

Head

26 Points Joined 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

Replies (5)

Kshitij

Consultant

62 Points Joined July 2009

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....

Partap

Head

26 Points Joined 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 Joined July 2009

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

CA Saiyum khan

Practicing CA

690 Points Joined November 2008

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.