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Reduction in mvat set off

Anirudha (CA) (39 Points)

26 July 2012

Dear Professional Colleague

I have a query regarding allowabilty of VAT set off on computers purchased by a software industry under MVAT.

Whether computers will be treated as plant and machinery and full set off will be allowed or liable to reduction as

per rule 53 (7)(a) of MVAT

Any case law on the same will be welcomed.

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1 Replies

Ankit Varia (Partner at A B D and Co LLP Chartered Accountants) (278 Points)
Replied 08 August 2012

Dear Anirudha,

A plain reading of Rule 53(7A) clearly suggest that office equipment is subject to retention. In such case we should even look into the contention of the company as well as statutory auditors, whether they have classified the product as PM or Office equipment.

In case of one of my client full setoff has been availed in such case which has not been disallowed by the department( I WUD NOT GIVE ANY NAMES).

If you are a vat auditor, i would suggest you to give full setoff on the same and give appropriate note in the audit report. Let the department decide on the case.