Capital Asset

This query is : Resolved

Dhankar (Querist)
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21 February 2010 Where a Capital Assets i.e DG ,A.C etc is purchased for the Resturant business,can we claim VAT Credit on the Assest purchasedi

shrikant

shrikant (Expert)
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21 February 2010 Dear Dhankar

I you can prove it is essential for business then yes. According to my opinion its Yes.

Dhankar

Dhankar (Querist)
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21 February 2010 But on the other hand we are charging depreciation on the assests,so how it is possible that law will allow us to take double double benefits.

DEEPIKA GOEL

DEEPIKA GOEL (Expert)
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21 February 2010 Yes, you can claim the VAT credit for capital goods. However, as per section 9(9) of DVAT Act, 2004, the VAT credit in respect of capital goods shall be allowed as follows:-

1/3rd of the input tax( VAT credit) shall be allowed in the same tax period.

Remaining 2/3rd of the VAT credit shall be allowed in equal proportion in two immediately successive financial year.

For depreciation purpose, we would not capitalise the amount to the extent related to the VAT credit for which we could claim the benefit of credit. As as per the income tax act, the depreciation can not be claimed on the part of the amount paid as tax at the time of purchase for which we can claim credit.

shrikant

shrikant (Expert)
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21 February 2010 Dear Dhankar

Depreciation and VAT act are two separate things. But you have to take care that you have not claimed depreciation on VAT credit portion/claim.

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