AS-19
This query is : Resolved
30 December 2010
I have come across a clients dealing as follows:
They take on lease vehicles say for X no. of yrs. Eithr at the end of lease period or b4 that they cancel the lease agreement & they purchase the asset from the Lessor. The value determined say is Rs. 450000 by the Lessor.
Now my client searches for the buyer for the vehicle. suppose the buyer pays 400000 for the vehicle. What my client does is that they treat Rs. 50000 paid by client to the lessor as Lease rent & deduct TDS on it & Rs. 400000 is remited directly to Lessor. Rs. 50000 is not shown as the Loss on account of the Sale of FA as the vehicle is not shown as an FA of the Company.
Is the treatment correct?
They take on lease vehicles say for X no. of yrs. Eithr at the end of lease period or b4 that they cancel the lease agreement & they purchase the asset from the Lessor. The value determined say is Rs. 450000 by the Lessor.
Now my client searches for the buyer for the vehicle. suppose the buyer pays 400000 for the vehicle. What my client does is that they treat Rs. 50000 paid by client to the lessor as Lease rent & deduct TDS on it & Rs. 400000 is remited directly to Lessor. Rs. 50000 is not shown as the Loss on account of the Sale of FA as the vehicle is not shown as an FA of the Company.
Is the treatment correct?
02 January 2011
Since the machinary is purchased for trading, not for future benefit , it will not be treated as fixed assets in books.
I think , your client transaction is correct.
I think , your client transaction is correct.
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