FBT for capitalised expenses

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SUJIT KUMAR DASH (Querist)
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28 May 2008 dear sirs,
i want to know whether FBT will applicable to the expenditures which are capitalised during the year. i mean like Staff welfare ,if the head is capitalised weather for the expenses FBT will be applicable.
Sujit

CA. Yayati Tyagi

CA. Yayati Tyagi (Expert)
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28 May 2008 from the FAQ issued by CBDT:

29. In a case where the expenses are capitalized and amortized over a period, whether FBT will be payable over the whole of the amount capitalized or restricted to the amount amortized during the year?

FBT is payable in the year in which the expenditure is incurred irrespective of whether the expenditure is capitalized or not. However, the same expenditure will not be liable to FBT again in the year in which it is amortized and charged to profit.

Manish Agarwal

Manish Agarwal (Expert)
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29 May 2008 Sorry Yayati that is question no.19 and not 29 as suggested by you.Further don't you think that the expenditure is getting taxed twice.

CA. Yayati Tyagi

CA. Yayati Tyagi (Expert)
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30 May 2008 ya, in circular it is at no. 19, i copied it from following link which have put this question on no. 29:

https://in.rediff.com/money/2005/aug/31tax.htm

sorry, for inconvenience.

but anyway, text is correct and it is clear in the answer that exp. will not be taxable in the year, in which it is amortised and charged to profit. so, question of double taxation does not arise.

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