A Ltd. renovated a place for opening a retail showroom. They invested 50 lakhs for all renovation, equipment, interiors etc. After 2 years, A Ltd is selling the same business to B Ltd. B ltd assure A ltd to pay whole amount of investment in fixed assets which is made by A Ltd before two years. Now A ltd has to make a invoice on B Ltd. Whether VAT will apply on it. If yes, then what rate of VAT, the rate which they have paid when they bought the material or the rate which is applicable on Ready assets. How A ltd will treat this whole transaction in their books of accounts. If the date of sale of business is 1st december, but B ltd approved and accepted all details on 23rd January, what will be the date of bill and what will be A ltd`s liability?
2 Replies
Amir
(Learner)
(4016 Points)
Replied 25 January 2010
Dear Lalit,
I think VAT will not apply in this case because A ltd. has not sold it;s stock in trade..It was Capital Asset i:e A ltd. is not in the business of selling Showrooms.
Capital Gains will be computed.
Regarding ur second query I couln't understand how can business be sold at a earlier date when Bltd. has accepted the term only at a later date.
Kiran Kumar V
(C.A. Final)
(181 Points)
Replied 26 January 2010
Mr.Amir is Correct, Show room will not come under the definition of goods and not only that the intention of seller is not to sell as stock in trade. Therefore, VAT may not apply in this transaction Capital Gains U/s 45 will attract.
Regards,
Kiran Kumar V
Recent Topics
- Avoiding tax audit in case of intraday equity loss
- Form 3CEAB
- Form 3CEAA and Form 3CEAB
- DIR 3 Web KYC
- Can i declare LTCG income as business income if I
- Stock entry in new software
- I have an EMI collection shop, what is its SAC cod
- Making payment once in quarter possible under QRMP
- Master File Documentation related
- Applicability of 44AD needs clarification
Related Threads
CAclubindia
