43(1) explanation 9

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gadreandbhide (Querist)
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21 October 2013 if credit of VAT is claimed in books then at what amount asset to be capitalised in I.T. rules?

Example - Cost 10,00,000/-
VAT 50,000
Excise 20,000

should asset be capitalised at 10,00,000 or 10,50,000 assuming full credit is availed.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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21 October 2013 It is but natural that if u are claiming the vat credit, the same should not be added to the cost of the asset for depreciation purpose. Accordingly you should capitalize the fixed asset at Rs 10 lakhs.

gadreandbhide

gadreandbhide (Querist)
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23 October 2013 thats the treatment in books...

what amount to be taken while adding to the block as per I.T. rules?

Nikhil Kaushik

Nikhil Kaushik (Expert)
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23 October 2013 I believe the answer remains same.

gadreandbhide

gadreandbhide (Querist)
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23 October 2013 section 43(1) explanation 9 nowhere mentions VAT credit can be claimed to reduce the cost of the asset

CA Pallav Singhania

CA Pallav Singhania (Expert)
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23 October 2013 Agree with Expert,
As the such credit is admissible, hence not required to be capitalized in the books..

As per I.T rules answer will remain the same..

Nikhil Kaushik

Nikhil Kaushik (Expert)
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23 October 2013 well then apply common sense. You cannot claim credit for the same thing twice.

gadreandbhide

gadreandbhide (Querist)
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23 October 2013 ok..thank you!