The Hindu Business Line : Dealing and trading costs

Am I entitled to claim expenses such as telephone, subscription to economic newspapers/magazines, depreciation and maintenance of car, computer and so on?

If so, is there a limit on the quantum that can be claimed as expenditure?

Suresh

Reply

A person who is regularly trading in shares can be said as carrying on the same as a business activity.

The income should, therefore, be charged under the head profits and gains of business or profession. In computing income under the head profits and gains of business or profession, expenditure incurred wholly and exclusively in connection with the business or profession can be claimed as a deduction.

In the reader's case if the telephone has been used wholly and exclusively in connection with the business the telephone expenses can be claimed as a deduction.

The same rule will apply in respect of expenses on economic newspapers/magazines. Maintenance expenses of car and computer can be claimed as a deduction under Section 30 of the Act provided the car and the computer have been used for the purpose of the business of the reader. As regards depreciation a claim under Section 32 can be made provided the following conditions are fulfilled:

The assessee is the owner or part owner of the asset.

The asset has been used for the purpose of the business or profession of the assessee.

In the instant case if the reader satisfies these two conditions, he can claim depreciation at the rates prescribed in the income-tax rules.

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