TDS on purchase of fixed assets ?

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CA Abhishek Singh (Querist)
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01 November 2010
1)Is TDS applicable for purchase of fixed asset. ?

2) one of our client has purchased "cartridge" used in printer
and capitalised it. is it a capital expenditure or revenue expenditure ??

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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01 November 2010 1. Purchase of fixed asset is supply so TDS not applicable

2.Purchase of cartidge is revenue expenses

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CA.ViVeK M ACA

CA.ViVeK M ACA (Expert)
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01 November 2010 TDS is applicable for revenue nature of expenditure hence purchase of fixed asset will not attract TDS

catridge is an accessory and which is being refilled time to time and expenditure incurred is neglible and need not be capitalised

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taxindiaconnect

taxindiaconnect (Expert)
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02 November 2010 It depends that what the fixed assets purchased is. If this is EPC contract under which the fixed assets is also sold along with the other activities, TDS is applicable on the entire contract value u/s 194C. The principal behind the applicability of TDS is some contractual work, not the item. In case is a machine is fabricated for someone’s specification with material supplied by the customer, there will be a TDS on it.

The principal behind capitalisation or non capitalisation depends not on cost of item purchased, but on the usage or consumption of an item. Am item which is part of an existing machine / equipment, if replaced is a revenue expenditure, while the same item if purchased at the time of purchase of main equipment capitalised. For example the same cartridge purchased included in the cost of printer is capitalised. You do not segregate the value of cartridge and charge it to revenue at that time.