Payment to Foreign Company in Advance

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shoeb parwaiz (Querist)
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07 April 2011 Dear All,

I have bought a machinery from a foreign company & I have made payment to that company from India. Now that machine will be used by the foreign company for producing my goods as per my requirement. After accomplishing my works machine will be sent to India. Now i wanna know that how i should show the payment in books of accounts. Can this machine capitalized in my books.Also, this is to inform that no duty has been paid so far because machine will come in India after accomplishing the works.

Regards

Hitender Gaur

Hitender Gaur (Expert)
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08 April 2011 What is the nature of your agreement, is it Work Contract or Rent + Salary, please clear it.

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shoeb parwaiz

shoeb parwaiz (Querist)
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08 April 2011 it is work contract.

Hitender Gaur

Hitender Gaur (Expert)
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08 April 2011 If ownership right is not transfered in your name you can't show that machine as your capital goods and can't claim any deprciation. Amount paid for Machine can be treated as Security or Mobilization advance which may be adjusted in RA bills at prorate bases as per agreement. If showing security that can be adjusted against the rent of due payments ag. R.A. Bills.

shoeb parwaiz

shoeb parwaiz (Querist)
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09 April 2011
Sir,

I have ownership right. In this case what step would be taken?

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