Treatment of demo/test drive vehicle

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..... Dear All, The brief facts of the case are as under:- Assessee is a private limited company Assessee company is an authorized dealer of a reputed car manufacturer As per policy of manufacturer the dealer has to purchase and pay the price for the demo/ test drive car The car is insured and registered in the name of the dealer The car is used only for prospective customer dem .....

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..... o/test drive purpose As per the policy of manufacturer the demo/test drive car has to keep by dealer atleast for 2 years After two years dealer can sell the car as used car. In this matter my queries are as under:- 1. Accounting:- Cost of Car should be capitalised or charged to revenue. If capitalsed should be categorised under plant machinery or under Motor car .....

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..... 2. Income Tax If charged to revenue then whether allowable under the IT Act . 3. Service tax If categorised as plant, Whether cenvet credit is available under service tax output category "Authorised service station" or "Business Auxiliarry servcies". 4. Wealth tax If categorised as Motor Car, whether taxable under the wealth tax act , being more than one car. Thanks .....

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..... - Reply By Radha Arun - The Reply = The demo car is not an input for 'authorised service station', and no credit would be available towards that. What is the service that is being classified here as BAS? - Reply By ca. indore - The Reply = Thanks for reply. Under BAS, Finance commission received from banks and finance company for finance of vehicle are classified. - Reply By Radha Ar .....

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..... un - The Reply = The excise duty on demo car is not available as credit towards service tax. - Treatment of demo/test drive vehicle - Query Started By: - ca. indore Dated:- 5-8-2011 Income Tax - Got 3 Replies - Income Tax - Discussion Forum - Knowledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - .....

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..... TaxTMI - TMITax .....

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