Capital Modvat

Dear Sir,

I am working in a M S Structural mfg company which is installed before 3 years.  When I have applied for power connection, the department denied that the power cable is not in ready stock . Hence, I purchased the required cable and given to the Electricity Department for the expedited connection. In accounts I had taken the capital Modvat in that year. Now the excise department is demanded the Modvat with interest after completing the Statutory Audit defining that the cable used outside the unit.  Now the Modvat with interest is deposited by me . The question arises that:- Can I capitalize the Modvat now in our books with interest and get depreciation benefit in this year . Please guide me for correct entry.

Vijay Jain

Replies (1)

As far as I Know the Modvat can be capitalised but interest can not be capitalised , there is no provision in taxation to capitalise the interest !! but lets wait for other viewsof eminent experts ..   

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