Deduction available or not
This query is : Resolved
04 May 2018
Suppose i have paid advance to purchase capital asset and that advance has been forfeited by seller. Now in the hands of seller it is taxable under other source but am i eligible to claim it as an expense?? If yes then under which section??
In the case of above what if advance is paid for material??
In the case of above what if advance is paid for material??
04 May 2018
1. Since the advance has been paid for the purchase of capital asset , it is a capital expenditure and as such you can not claim it as an expense to compute your income . It has to be capitalised.
2. Advance paid for Material- You can claim as an expenses subject to the conditions as laid down U/s 37(1).
2. Advance paid for Material- You can claim as an expenses subject to the conditions as laid down U/s 37(1).
04 May 2018
Thanks Sir but if we have not received asset how can we capitalised it?? and should we charge depreciation on it??
04 May 2018
As per the fundamentals of Income tax Act, Capital expenditures are always disallowed unless specifically allowed.
In the given case, the said loss is in the nature of capital receipts..
Under the income tax act, there is no section which permits the deduction in respect of capital loss of this nature, hence it is not allowed,
In the given case, the said loss is in the nature of capital receipts..
Under the income tax act, there is no section which permits the deduction in respect of capital loss of this nature, hence it is not allowed,
04 May 2018
Furthermore, No deduction in respect of this loss shall be allowed as a depreciation too.
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