Please give your opinion with supporting case law on the issue as to whether car lifetime tax,one time payment, is revenue expenditure. Sec.43B proivdes that any tax,duty and fee are deductible in the year of payment. Whether the above said tax is enduring nature and needs to be capitalised in the face of Sec.43B
An early response is welcome
I think it should be added to the cost of the vehicle and assessee is free to claim depreciation accordingly.
You can make case in this way since it is very good argument to support you view, otherwise, car tax is a revenue expenditure and it does not add anything to your car except there is no payment further on account tax.and it is not depriciating.
Quote from: pawansingla on March 18, 2011, 08:10:05 PM
I think it should be added to the cost of the vehicle and assessee is free to claim depreciation accordingly.
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Quote from: sai prasad on March 16, 2011, 09:41:21 AM
Please give your opinion with supporting case law on the issue as to whether car lifetime tax,one time payment, is revenue expenditure. Sec.43B proivdes that any tax,duty and fee are deductible in the year of payment. Whether the above said tax is enduring nature and needs to be capitalised in the face of Sec.43B
An early response is welcome
This section in short, deals with certain types of payments and directs the taxpayer to claim such payments as an expense in the same assessment year when it was actually paid and not in the year in which the liability to pay such sum was incurred.
For example, Mr. Ram, owner of a logistics firm, has purchased a motorbike for rendering the courier services for his firm in August 2017. This purchase can be labeled as an actual expense/payment and pertains to the month of March 2017. For this, Mr. Ram can claim a deduction for the year ending March 2017 itself by showing a proof of this while filing his return in September 2017. If Mr. Ram pays this amount in October 2017, this deduction will be available for the year ending March 2018.
When filing the income tax returns, Mr. Ram can show the proof of making such payment and claim the deduction in the same year (in which the amount was accrued).