Capitalisation of fixed asset
This query is : Resolved
09 April 2012
my client has given advance for a machinery and has received the machine 2 yrs back.the machine was nt as per specified description and so remaining amount was not paid.the supplier didnt gave the bill as a result the amount is still lying as advance...what treatment can be done??/ can the amount be capitalised??
09 April 2012
Dear Sonam,
First decide whether the amount is recoverable or not? If Dealer is going to deliver the machine then treat as Capital Advance and Show the same in Revised Schedule VI under Non - current assets.
If amount is not going to recover then treat the same as bad debt for capital advances.
If, Machine came to you but supplier is not submitting the Bill then best way is to take the support of any agreement or delivery challan came along with that.
Without bill, you wont be eligible to claim CENVAT Credit on Capital goods.
First decide whether the amount is recoverable or not? If Dealer is going to deliver the machine then treat as Capital Advance and Show the same in Revised Schedule VI under Non - current assets.
If amount is not going to recover then treat the same as bad debt for capital advances.
If, Machine came to you but supplier is not submitting the Bill then best way is to take the support of any agreement or delivery challan came along with that.
Without bill, you wont be eligible to claim CENVAT Credit on Capital goods.
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09 April 2012
if delivery challan is there then can the amount be capitalised??/
09 April 2012
Plz check all the details on the delivery challan, but i doubt bcoz you dont have Invoice, how you would convince your Auditor for such capex treatment.
09 April 2012
Even invoices are obtained, it cannot be capitalised because machineries require commencement and installation certificate.
If u decide to write off the capital advances, then the same will be disallowed in income tax.
Hence, better to get the advance back from the supplier or get proper goods. If the advance crosses one more year, you will not be legally able to claim the advance amount also pursuant to law of limitation of 3 years.
If u decide to write off the capital advances, then the same will be disallowed in income tax.
Hence, better to get the advance back from the supplier or get proper goods. If the advance crosses one more year, you will not be legally able to claim the advance amount also pursuant to law of limitation of 3 years.
09 April 2012
Dear Sonam,
generally, Invoice/bill comes along with the delivery challan but in your case, if invoice is not received then you can book the asset in your accounts on the basis of delivery challan being the last resort. Your client should also mail the client regarding this invoice and attach the print out with it.
generally, Invoice/bill comes along with the delivery challan but in your case, if invoice is not received then you can book the asset in your accounts on the basis of delivery challan being the last resort. Your client should also mail the client regarding this invoice and attach the print out with it.
09 April 2012
When supplier has refused to send invoice then there is no chance that he will send the invoice across mail.
Issue may be raised by Auditor at the tym of audit.
Sonam, If you have Purchase agreement and any written mail / letter exchanged with supplier, that will be construed as an evidence to purchase such a machinery in front of auditor.
Issue may be raised by Auditor at the tym of audit.
Sonam, If you have Purchase agreement and any written mail / letter exchanged with supplier, that will be construed as an evidence to purchase such a machinery in front of auditor.
09 April 2012
ofcourse, The supplier will not issue any invoice that's why im suggesting to mail the suppier for getting the invoice and remind the same to the supplier and take the print out of the mail.
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