[Query]: Student Rajni Arora (rajjuarora14@gmail.com)
 QUESTION ASKED BY RAJNI ARORA

  asked "Capital expenditure on scientific research (not certified by the prescribed authority) as per section 35 for alternate tax regime
1)Purchase for land for growing herbals for research  
2) purchase of equipment for research  
3)cost of cultivation of herbals  
If not certified are they eligible for depreciation ?  

ANSWER TO ABOVE QUESTION

Under the alternate tax regime, capital expenditure on scientific research that is **not certified by the prescribed authority** is not eligible for a **deduction under Section 35** of the Income Tax Act, 1961. However, such expenditure may still qualify for **depreciation under Section 32**.
 
### Treatment of Expenditure:
1) **Purchase of land for growing herbals for research**  
  - Land is a **capital asset**, but it is not a depreciable asset under Section 32.  
  - Hence, **no depreciation is allowed** on land.
 
2) **Purchase of equipment for research**  
  - If used for business purposes, it qualifies as a depreciable asset under Section 32.  
  - Eligible for **depreciation as per the applicable rate** (usually under "Plant & Machinery").   
 
3) **Cost of cultivation of herbals**  
  - This is generally considered **revenue expenditure** if incurred on a regular basis.  
  - If capitalized, it may not qualify as a depreciable asset unless it is part of a larger setup where depreciation is applicable (like a nursery infrastructure).   
 
### Conclusion:   
- **Land – No depreciation**   
- **Equipment – Eligible for depreciation under Section 32**   
- **Cultivation cost – Not a depreciable asset unless linked to an eligible structure**

CA INTER - 

RAJNI ARORA

 [Query]: Student Rajni Arora (rajjuarora14@gmail.com)
 QUESTION ASKED BY RAJNI ARORA

 "ABC Ltd ,a registered supplier of Gujarat  
 
"The company had given on hire 5 trucks to one of the transporter of vadodara (a goods transporting agency) for transporting goods for 10 days. The hiring charger will be rs 7500 per day per truck "
 
Will he be liable to pay gst under RCM?
OR
Services by way of giving means transportation of Goods on hire to a good transport agency are exempt ?"

ANSWER TO ABOVE QUESTION

  RCM Applicability on Goods Transport Agency (GTA):
As per Notification No. 13/2017-Central Tax (Rate) dated 28.06.2017, GST under RCM is applicable when a GTA provides services of transportation of goods to specified recipients (like registered persons, factories, companies, etc.).
However, in this case, ABC Ltd. is NOT a GTA; it is simply providing trucks on hire to a GTA.
 
Exemption on Hiring of Means of Transport:
As per Entry No. 22(b) of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, services by way of giving on hire a means of transportation of goods to a GTA are exempt from GST.
Since ABC Ltd. is hiring out trucks to a GTA (i.e., a goods transport agency), this transaction qualifies for exemption.
 
Conclusion:
ABC Ltd. is NOT liable to pay GST under RCM because RCM applies when a GTA provides transport services, not when a supplier hires trucks to a GTA.
This service is exempt from GST, as per Notification No. 12/2017.
No GST needs to be charged or paid on this transaction.

CA INTER - 

RAJNI ARORA

  [Query]: Student Vinay Solanki (vinaysolanki230617@gmail.com)  

QUESTION ASKED BY VINAY SOLANKI

  "In Working Capital Management if the problem is silent about the nature of Administrative Overhead.  
Can we solve the problem taking it as necessary for production & including such Overhead as a part of Cost of Production? "

ANSWER TO ABOVE QUESTION

Both in Cost sheet as well as in working capital, in the absence of information, admin exps are to be considered as general administration exps ie not related to production....

CA INTER - 

VINAY SOLANKI

 [Query]: Student Rajni Arora (rajjuarora14@gmail.com)
 QUESTION ASKED BY RAJNI ARORA

  asked "Capital expenditure on scientific research (not certified by the prescribed authority) as per section 35 for alternate tax regime
1)Purchase for land for growing herbals for research  
2) purchase of equipment for research  
3)cost of cultivation of herbals  
If not certified are they eligible for depreciation ?  

ANSWER TO ABOVE QUESTION

Under the alternate tax regime, capital expenditure on scientific research that is **not certified by the prescribed authority** is not eligible for a **deduction under Section 35** of the Income Tax Act, 1961. However, such expenditure may still qualify for **depreciation under Section 32**.
 
### Treatment of Expenditure:
1) **Purchase of land for growing herbals for research**  
  - Land is a **capital asset**, but it is not a depreciable asset under Section 32.  
  - Hence, **no depreciation is allowed** on land.
 
2) **Purchase of equipment for research**  
  - If used for business purposes, it qualifies as a depreciable asset under Section 32.  
  - Eligible for **depreciation as per the applicable rate** (usually under "Plant & Machinery").   
 
3) **Cost of cultivation of herbals**  
  - This is generally considered **revenue expenditure** if incurred on a regular basis.  
  - If capitalized, it may not qualify as a depreciable asset unless it is part of a larger setup where depreciation is applicable (like a nursery infrastructure).   
 
### Conclusion:   
- **Land – No depreciation**   
- **Equipment – Eligible for depreciation under Section 32**   
- **Cultivation cost – Not a depreciable asset unless linked to an eligible structure**

CA INTER - 

RAJNI ARORA

 [Query]: Student Rajni Arora (rajjuarora14@gmail.com)
 QUESTION ASKED BY RAJNI ARORA

 "ABC Ltd ,a registered supplier of Gujarat  
 
"The company had given on hire 5 trucks to one of the transporter of vadodara (a goods transporting agency) for transporting goods for 10 days. The hiring charger will be rs 7500 per day per truck "
 
Will he be liable to pay gst under RCM?
OR
Services by way of giving means transportation of Goods on hire to a good transport agency are exempt ?"

ANSWER TO ABOVE QUESTION

  RCM Applicability on Goods Transport Agency (GTA):
As per Notification No. 13/2017-Central Tax (Rate) dated 28.06.2017, GST under RCM is applicable when a GTA provides services of transportation of goods to specified recipients (like registered persons, factories, companies, etc.).
However, in this case, ABC Ltd. is NOT a GTA; it is simply providing trucks on hire to a GTA.
 
Exemption on Hiring of Means of Transport:
As per Entry No. 22(b) of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, services by way of giving on hire a means of transportation of goods to a GTA are exempt from GST.
Since ABC Ltd. is hiring out trucks to a GTA (i.e., a goods transport agency), this transaction qualifies for exemption.
 
Conclusion:
ABC Ltd. is NOT liable to pay GST under RCM because RCM applies when a GTA provides transport services, not when a supplier hires trucks to a GTA.
This service is exempt from GST, as per Notification No. 12/2017.
No GST needs to be charged or paid on this transaction.

CA INTER - 

RAJNI ARORA

 [Query]: Student Rajni Arora (rajjuarora14@gmail.com)
 QUESTION ASKED BY RAJNI ARORA

  "Sreshth Pvt ltd a registered supplier of good & services in Kolkata.
 
"Interstate security services provided to torrent higher secondary school (unregistered under gst) for their annual day function organised in katyani auditorium outside the school campus"
  
The exemption under section 11 cannot be availed but is he liable to pay tax under services notified RCM ?  
 
If yes then can he avail ITC on output tax or he is restricted as ITC cannot be availed on output tax for RCM "

ANSWER TO ABOVE QUESTION

    GST Implications on Security Services Provided by Sreshth Pvt. Ltd.
 
1. Exemption Under Section 11 of CGST Act, 2017:
Section 11 allows the government to grant exemptions on specific supplies through notifications.
However, in this case, the exemption cannot be availed, meaning the security service provided to the school is taxable.
 
2. Applicability of Reverse Charge Mechanism (RCM) on Security Services:
Notification No. 13/2017-Central Tax (Rate) dated 28.06.2017 specifies that security services provided by a registered person to a registered person are covered under RCM.
But in this case, Torrent Higher Secondary School is an unregistered entity.
Since the recipient (school) is unregistered, RCM does not apply.
Hence, Sreshth Pvt. Ltd. must charge and pay GST under the forward charge mechanism (FCM) instead of RCM.
 
3. Can Sreshth Pvt. Ltd. Avail ITC on Output Tax?
Since Sreshth Pvt. Ltd. is liable to pay GST under the forward charge mechanism (FCM) and not RCM, it can avail Input Tax Credit (ITC) on input services and goods used for providing security services.
ITC restriction applies only when GST is paid under RCM, but in this case, GST is paid under FCM, so ITC is allowed.
 
Final Answer:
RCM is NOT applicable because the recipient (school) is unregistered.
Sreshth Pvt. Ltd. must charge and pay GST under the forward charge mechanism (FCM).
ITC can be availed on the output tax paid.

CA INTER - 

RAJNI ARORA