During 2009-10 we received 5% interest subsidy on our bank loan under TECHNOLOGY UPGRADATION FUND SCHME (TUFS), we have paid the interest duirng 2007-08 & 2008-09 and already shown it as an expenditure.
Please let me know that how we should show this subsidy into our book of accounts and what will be the impact of Income Tax on this receipt ?
Dear Sir,
Pls specify how the interest paid in FY 2007-08 & 2008-09 was treated.. Was it capitalised? or was claimed as revenue expenditure u/s 36???
If revenue -
In Books it will treated as "other income" & will be shown separately in the Profit & Loss A/c.
In income tax - taxable item under PGBP u/s 41(1).
If capital -
In books - it should be credited to that fixed asset account in which earlier it was debited & moving on depreciation shall be charged on revised amount.
In income tax - I dont think Explanation 10 to sec 43(1) i:e Actual cost can be applied in this case since it is to be reduced from actual cost & not from WDV. So I think in this case it would be a "tax free receipt"....
Shyam S Gupta and Company
New Delhi
CA Inter
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Saini Pati Shah & Co LLP, Chartered Accountants
Mumbai
CA Final
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