VALUATION OF PERQUISITE

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CA. Ashutosh Dadhich (Querist)
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20 February 2009 Sir,

co. bought one Plazma T.V. of rs. 100000/- and one employee is using that in his home.
We are taking valuation of pequisite @ 10% of cost of T.V. as per valuation rules and company is taking Dep. @ 20%. hence Asset will be fully depreciated in 5 Year in the books of company.
my question is that while preparing computation of the employee after 5 year, valuation of perquisite should be taken bcoz
1. still he is using asset
or

Valuation of Perq not be taken bcoz
co. has fully Depreciated asset.

what is the general practice.

Do tell me your logic for your opinion.

K V Subba Rao

K V Subba Rao (Expert)
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20 February 2009 In case of tax matters we are permitted to apply common sense or logic only if it benefits the Exchequer; otherwise strictly No. For example, take the case of TDS on Rent. There is specific provision not to affect TDS on Service Tax component. We do not apply this logic while affecting TDS for other services.

With regard to perquisite valuation, it is required to be calculated at 10% per annum of actual cost (Ref: Para 15.11 of 31st edition of Singhania's Direct Taxes Ready Reckoner).

In the absence of any provision to consider WDV and on account of specific requirement to adopt actual cost, you are required to continue to adopt 10% of actual cost notwithstanding writing off full cost (or may be retained at Re 1 value in books)beyond 5 years period.

Regarding general practice, I refrain from making any Comments or Remarks