26 February 2020
The Assessee had imported a machine in F.Y.2015-16 and taken the benefit of EPCG scheme, got exemption from Basic Customs duty and Cess under the scheme. But in F.Y.19-20 the conditions of export obligation were not fulfilled and the Assessee has to pay Customs duty of 1,12,00,000/- along with Interest of Rs.67,20,000/-. My questions are, 1) Is that interest amount of Rs.67,20,000/- allowed as expenditure under Income Tax Act. 2) Can I Capitalise the Customs duty paid in the 4th year, if so as per which provisions of PPE as already Asset was put to use 4 years back.
21 May 2020
I think the custom duty levied needs to be capitalised and the interest part can be debited to PL each year with regards to the useful life of the asset.
25 May 2020
Sir, The Asset is capitalised 4 years back and now if we Capitalise the customs duty then it will result in the increase in the value of Asset without increase in its performance and life, Is this technically correct treatment ? or Customs duty paid needs to be expensed out ?
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