14 March 2011
Illustration 1 Mr. X set up a new factory in the backward area and purchased plant for Rs. 500 lakhs for the purpose. Purchases were entitled for the CENVAT credit of Rs. 10 lakhs and also Government agreed to extend the 25% subsidy for backward area development. Determine the depreciable value for the asset. Solution Particulars Rs.(in lakhs) Cost of the plant 500 Less: CENVAT 10 490 Less: Subsidy 98 Depreciable Value 392
16 March 2011
kkk just see ( Rs in Lacs) Cost of the plant 500 Less: CENVAT 10 * 490 Less: Subsidy 98 Depreciable Value 392
*(As per income tax act if u take cenvat credit then that amount is not eligible for depreciation) ** subsidy is given by govt and same if u got then that much amount is also reduced from cost of plant
last thing is that depreciation is calculatd on the cost which is really incurred by the company. in ur case as 98 lacs is refunded to the company so this is not the cost to company and cenvat is like a hard cash so that also not part of cost
18 March 2011
thanks neeraj. but see my query is-it is given in the question that 25% subsidy is given. but i dnt understand how the figure of 98 is derieved. because 25% of 490 is nt 98.
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