DEAR EXPERTS
PLS ADVISE ON THIS ISSUE
A PATNERSHIP FIRM WHO IS ENGAGED IN THE BUSINESS OF TRADING OF INDUSTIAL AUTOMOTATION.THEY
IMPORT CERATIN GOODS FORM CHAINA ON WHICH THEY PAID CUSTOM DUTY . HE DOES NOT ABLE TO TAKE ANY
CREDIT FOR SUCH DUTY.
WHETHER THE DUTY CAN BE INCLUDED IN THE PURCHASE OF THE ASSESSEE OR NOT FOR CALCULATING
INCOME TAX. WHAT SHALL BE THE TREATMENT MADE FOR SUCH IMPORT DUTY.
Are teh goods purchased Capital Goods or goods used for trading.
If they are capital goods then the customs duty will be added to the cost of the asset as explained in AS-10 Acounting for Fixed Asets and depreciation can be claimed.
If they are trading goods then the Customs duty will form part of the Inventory Valuation as per AS-2 Valuation of Inventories. the said AS states that all the expenditure incurred in bringing the inventories to their present location and condition inclusive of duties/taxes other than those whihc are recoverable from tax authorities subsequently shud be added to the cost of inventoreis.
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