Employee car expenses can come under company assessment if authorised by Board: Tribunal

S. Murlidharan | Updated on October 31, 2012

If a director of a company borrows money for buying a car and registers the car in his own name, whether the related expenditure by way of depreciation and interest on borrowings can be allowed in company assessment would depend upon whether there was a Board resolution authorising the director to do so and whether indeed the car was used for business purposes, held the Income-tax Appellate Tribunal in Seoul Mirdha Hotel & Resorts (P) Ltd. v. The ACIT Circle-1 Jodhpur.

A director of the appellant company bought a Santro car with the help of an ICICI Bank car loan in his personal capacity but passed on the interest and depreciation claims to the company which obviously attracted the axe of the assessing officer on the ground that these were personal expenses of the director.

The Tribunal directed the assessing officer to find out whether there was any Board resolution authorising the said director to go ahead with the purchase for business use.

(The author is a New Delhi-based chartered accountant)

Published on October 31, 2012

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