Applicability of Section 194Q on purchase of Fixed assets

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This discussion clarifies the applicability of Section 194Q on the purchase of fixed assets. The key point is that Section 194Q is generally not applicable if the entity had no turnover in the preceding financial year, even if significant capital receipts like share capital or fixed deposits were received. The experts confirm that such receipts do not count towards turnover for the purpose of Section 194Q.

Prabhu K

Prabhu K (Querist)

29 September 2023 Dear Experts,
Greetings!
In preceding financial year (i.e., FY 2022-23) our client has no turnover, but there is a receipt of share capital Rs.28Crores and Fixed deposit receipts Rs.48Crores during FY 2022-23
During FY 2023-24 my purchase value of Fixed assets from particular vendor exceeds Rs.3 Crores.
Can any one guide me whether 194Q is applicable for fixed assets purchased during the FY 2023-24 ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

29 September 2023 194Q applicable for fixed assets purchase but it is not applicable in view of no turnover in the previous year.

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Prabhu K

Prabhu K (Querist)

29 September 2023 Dear Seetharaman Sir,
Thank you very much for your answer.
There is no turnover in previous financial year but there is a receipt of share capital Rs.28Crores and Fixed deposit receipts Rs.48Crores during previous financial year.
Whether we need to consider this previous year receipt for applicability of 194Q.
Thank you

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

29 September 2023 No, such receipts will not fall under turnover.

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Prabhu K

Prabhu K (Querist)

29 September 2023 Dear Seetharaman Sir,
Thank you very much for your clarification. Now I understood.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

29 September 2023 You are welcome...
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