shekhar (Individual) 29 December 2009
A motor car purchased for 3L is to be used 50% for business use. (a) Can 1.5L be accounted under fixed assets with the objective of providing 15% 22500/- depreciation on it. (b) Can 50% of payments made towards car Insurance and Rep & Maint be also accounted under business expenses.
A V Vishal (Advocate) 29 December 2009
Yes, out of the total expenses you can disallow the part of expenses used for personal use in the P & L A/c.
CA Pradeep Jain (Director) 03 January 2010
Entire 300000/- should be capitalised by Dr. to Fixed Asset A/c since all expences incurred for new Asset
Vineet (Director) 04 January 2010
Part of asset cannot be capitalised.
The entire asset has to be capitalised in books and expenses are to be claimed as usual. If it is considered that 50% of use is personal, proportionate amount of expense under each head can be added back as personal expense in the computation of income.
There are few case laws wherein it has been held that part of depreciation cannot be allowed for personal use.
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