Mukesh Patel.in
practical tax & investment planning online
international tax expert / columnist / author / speaker

NAME GAME ON CAR DEPRECIATION!

Firm or company can claim depreciation on car purchased out of its funds, though in the name of its partner or director!

                    “What’s in a name? That which we call a rose by any other name would smell as sweet.”  This Shakespearean quote seems to have inspired as many five High Courts to hold that the Income-tax Department cannot refuse the claim for depreciation on a vehicle owned by a company or a firm, on the mere ground that it is not registered in its name, but stands in the name of its director or partner. Interestingly, there is no decision of any court or tribunal that has taken a contrary view on the subject.

             Section 32 of the Income-tax Act entitles a taxpayer to claim depreciation at prescribed rates for assets owned and used by the taxpayer for purposes of his business or profession. In case of a vehicle such as a motor car, it is common to come across cases where the car is registered under the Motor Vehicles Act in the name of a partner or a director (since it is a lot more economical to do so in terms of RTO taxes and registration charges), though the same has actually been purchased by a firm or company out of its own funds, or if acquired through borrowed funds the loan is repaid along with interest by the firm or company.

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Drive Home Amazing Tax Saving!

Purchase New Car Before September, ‘09

And Recover 25% Of Your Car Cost By March, ‘11

Note the figure ‘632,’ being the Cost Inflation Index just announced for FY 2009-10. This would be helpful in computing any taxable long term capital gains earned by you in the current financial year.

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50% Depreciation on Car can drive amazing Tax Saving!

Recover 25% Of Your Car Cost In 2 Years

Through New Purchase By 30th September, 2009!

Planning to purchase a new motor car for your business or professional use sometime in 2009? Are you aware of the fact that buying your car by 30th September, as compared to any time on or after 1st October can have a huge impact on your resultant tax saving? (more…)

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