treatment the same in audit.

[ashok joshi]

dear sir,

sub- income tax

Mr. Love import a machinery from japan worth Rs. 1 crore., but that such machinery\'s there is no such operator in india., so, Mr. Love say to him(exporter) please provide me a operator for the same because of their (india) is no operator., so, he (exporter) provide his employee for the same for 1 year agreement/contract for Rs. 10 lacs.
now Question is arise that what will be the total value of machinery ? what will be the value revenue and capital expenditure ? what will be treatment for the same ?
Rs. 10 Lacs will be shown under which head and either this expenditure is capitalizes or not ???

contact - [email protected]

with regrads
Ashok Kumar Joshi

[CA Rachit Agarwal]

Rs. 10 Lacs will be revenue expenditure.

It is immaterial that whether the machine is run by the reisdent or non resident.

However if Rs. 10 Lacs is paid under Trial production phase, then it would be capitalized. Further if the business does not commences withing that period then only the Rs. 10 Lacs would be capitalized.

AI Summary

Accounting Treatment of Rs. 10 Lacs for Operator: Revenue Expenditure or Capitalized During Trial Production Phase? An individual inquired about the accounting treatment of Rs. 10 lacs paid for an operator provided by an exporter for machinery imported from Japan. The question focused on whether this amount should be capitalized or treated as revenue expenditure. A chartered accountant responded that the Rs. 10 lacs should be considered revenue expenditure unless it is paid during a trial production phase, in which case it would be capitalized. Additionally, if the business does not commence within the agreed period, the amount would also be capitalized.