Please Help: Treatment of following expenditure.
Posted Date : 17-Jun-2013 , 10:43:28 pm | Posted By Shalini Kumari Jha
Company paid amount of Rs. 90 lacs for acquairing a software with the condition that if this amount paid by company today than after company can purchase at any time it will not affect cost of software in future. 3 years passed still company have no software. But company writing off that amount of 90 lacs on the basis of SLM for the period of 10 years. This treatment is right or not, if not than how this should be treat in account by company ?
Category : Income Tax | Answers : 0 | Comments : 2 | Hits : 85
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CA.Raman Mutneja
18-Jun-2013 , 02:27:24 pmIt should be treated as advance given for assets and should not write off it should be written of when company acquire it.
Haresh
21-Jun-2013 , 09:37:09 pmThe amount paid by the company towards purchase of software earlier must shown as advance for asset and not as asset and only on acquisition of software it must have capitalized. And advances which are irrecoverable cannot be treated as trading loss and would not be allowed to written off. refer ACIT vs Khoday India Ltd. ITAT, BANGALORE BENCH ‘B’ ITA No. 89/Bang/2008