Dear All,
The brief facts of the case are as under:-
Assessee is a private limited company
Assessee company is an authorized dealer of a reputed car manufacturer
As per policy of manufacturer the dealer has to purchase and pay the price for the demo/ test drive car
The car is insured and registered in the name of the dealer
The car is used only for prospective customer demo/test drive purpose
As per the policy of manufacturer the demo/test drive car has to keep by dealer atleast for 2 years
After two years dealer can sell the car as used car.
In this matter my queries are as under:-
1. Accounting:-
Cost of Car should be capitalised or charged to revenue.
If capitalsed should be categorised under plant & machinery or under Motor car
2. Income Tax
If charged to revenue then whether allowable under the IT Act.
3. Service tax
If categorised as plant, Whether cenvet credit is available under service tax output category "Authorised service station" or "Business Auxiliarry servcies".
4. Wealth tax
If categorised as Motor Car, whether taxable under the wealth tax act, being more than one car.
Thanks
CAclubindia
