Accounting treatment

This query is : Open

Sanjay Kumar Mishra (Querist)
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04 August 2016 I (A Company) have received some amount as security money Rs. 10 lakhs against fixed assets issue to an agency.
agency after some time close his business and did not return my fixed assets. How will i treat this amount of Rs. 10 lakhs in my books of accounts.

I will be thank full if anybody reply soon.

Rohit A Kadam

Rohit A Kadam (Expert)
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04 August 2016 You can treat it as receipt towards disposal of the fixed asset if you are no longer going to claim the fixed asset and/or the other company is no longer going to claim the security deposit.

If you have claimed depreciation, the difference in value will be the profit/loss from disposal.

Sanjay Kumar Mishra

Sanjay Kumar Mishra (Querist)
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05 August 2016 Thanks, you mean to say that the receipt is taxable as Short term capital gain between the differences of receipt amount WDV amount.

Thanks once again

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Sanjay Kumar Mishra

Sanjay Kumar Mishra (Querist)
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05 August 2016 One more thing if it is a disposal of assets, then whether we have to generate sales invoice and pay VAT, excise duty or short term capital gain also..... please, guide.

Rohit A Kadam

Rohit A Kadam (Expert)
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05 August 2016 From tax perspective yes. It will be a capital gain.