capitalisation in case bills are in name of Holding

This query is : Resolved

Sachin Sharma (Querist)
Follow

12 November 2008 I would like to have your kind opinion related to accounting issue while capitalising items for construction of a buliding in case of subsidiary where due to tax, admn. and finance reasons the road permits,bills etc.are made in name of Holding company.

In that scenrio, the subsidiary cannot capitalise for want of bill and holding company has no valid right for capitalisation also.Please give opinion what type of accounting / Contractual arrangemt be made between holding and subsidiary which are in financial and tax interest also.

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
Follow

12 November 2008 The subsidiary company can enter into an agreement with holding company stating the arrangement and that the subsidiary company will reimburse the claim by holding company in this regard. Based on the reimbursement claim and the agreement, subsidiary can capitalise. But the problem here could be one of service tax liability on business support to subsidiary by Holding company. AS I do not know the circumstances which warrants such an arrangement by subsidiary wuth holding company, I am unable to comment on that aspect.

Sachin Sharma

Sachin Sharma (Querist)
Follow

12 November 2008

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
Follow

12 November 2008 Your question box remains blank!

Sachin Sharma

Sachin Sharma (Querist)
Follow

12 November 2008 Can leasing is better option to avoid tax burden or there could be other ways?

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now