Impact of Amortisation

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..... Impact of Amortisation
Query (Issue) Started By: - Rajiv Chawla Dated:- 10-3-2012 Last Reply Date:- 12-2-2015 Income Tax
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Income Tax
For a particular project involving capital investment, customer (overseas) offers that the CAPEX would be amortised over a certain level of parts produced and delivered to the customer. The amortisation amount per piece is added to the unit pr .....

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..... ice of the product. Since the export invoices are prepared on the increased unit price of the product, therby the sales turn-over increasing to the extent of the amount amortized during the year, and thus the profit. Is it allowed as per IT law that the taxable income is adjusted to the extent of amount amortized. Illustration: Capital Investment on Toolins and Machines 1,00,00,000. Customer ad .....

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..... ives this to be amortized over 2,00,000 parts production & suppy Amortization Amount 50 apiece Base price of the product 200 apiece Billng Price 250 apiece Products supplied during the year 1,00,000 pieces Sales Turnover 2,50,00,000/- Profit Before Tax (after depreciation) 75,00,000/- Can the Taxable Income be declared as follows PBT 75,00,000/- Less: Amortization amount received 50,00,00 .....

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..... 0/- (50/- apiece for 1,00,000 pieces supplied) Add: Depreciation for the Capital Equipment 15,00,000/- (@15% on 1,00,00,000/- CAPEX) Taxable Income 40,00,000/- Reply By MARIAPPAN GOVINDARAJAN: The Reply: Whether you have got clarified in this issue? If not please inform.
Discussion Forum - Knowledge Sharing .....

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