Sale of Fixed Assets

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jay (Querist)
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13 August 2007 I am confused -

We have computer stationery & Consumables business

We have Partner ship firm - we have one machine its book value after Dep. Rs.550000/- (Fixed Assets) we Sale to Xyz Party - @ Rs.575000/-

Now how i can give treatment in books ?

secondly XYZ party wants Invoice so which invoice I have to raise TAX or Retail and what % I have to charge But Whether we can Issue Invoice or not ?

So Kindly reply

CA Manish Iyer

CA Manish Iyer (Expert)
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13 August 2007 Debit Bank or XYZ Party's a/c with 575000, Credit Fixed Assets A/c. with 550000 and Credit Profit on sale of Fixed Assets Rs.25000. This profit has to be disclosed separately in your profit and loss account as per AS 5 issued by the ICAI.

You have to issue an invoice. Whether Retail or Tax depends on your VAT status.

jay

jay (Querist)
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14 August 2007 Thanks for reply,

But Can we issue Invoice ?
Can we charge vat output @4% (VAT if 4% on it) (i.e. 5,50,000 inclusive of 4% VAT and To be deposited or adjusted agst VAT INPUT

We have Purchased in 2005 from Out side Gujarat Machine Manufacturer (Mumbai)

Kindly reply sir, Thanks once again

CA Mani

CA Mani (Expert)
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14 August 2007 See,

If sale of fixed asset is chargeble to tax under VAT in your state, You are required to pay VAT as per the rate applicable.

The basic concept of VAT/ CENVAT is that You can claim the credit of VAT/ CENVAT paid by you but not collected by you.

So, You cannot claim the VAT Input credit on VAT collected the sale proceeds.

It can be claimed by the buyer.

Issue of invoice is a subjective case.

It's your option to issue invoice for the same.

I hope it will resolve your query.

Regards,

Mani

jay

jay (Querist)
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14 August 2007 Thanks you sir,

Finally I can raised Invoice if in Gujarat VAT can be charged or CST Can be charged if party is out side of Gujart --

Secondly Can we charge 3% agst Form C on this Fixed assets if sale it out side Gujarat ?

Sir I knew that VAT can be claimed by buyer only.

But if I will issue Invoice then My Total Turn Over will increase when I Credit My Sales in that particular month will increase drastically.

Kindly reply Please sir

Shashi Mohan Jha

Shashi Mohan Jha (Expert)
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14 August 2007 This sale would not part of your turnover..SInce sale of FA also attracts VAT...you have to raise invoice

jay

jay (Querist)
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14 August 2007 Thank you sir for reply

But Sir If sale Out side Gujarat then Can we Charge @ 3% CST agst Form C

Please reply now I have only last doubt on this

jay

jay (Querist)
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14 August 2007 Please reply

jay

jay (Querist)
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14 August 2007 pl reply

CA Mani

CA Mani (Expert)
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16 August 2007 If sale is falling under the definition of sale of goods under CST, Definitely CST is chargeable.

If no, No VAT/CST is to be charged as it is inter-state sale..