Computing value of Assets for application of POEM Test – Non Resident Taxation – International Taxation Case Study
A company shall be said to be engaged in ‘Active Business Outside India’ for the purpose of POEM, if amongst other conditions, less than 50% of its total asset are situated in India. From the following Balance Sheet, compute the value of the asset : –
| Asset | Amount – Opening | Amount – Closing |
| Computers – Depreciated individually | 5,50,000 | 7,50,000 |
| Building – Block of Asset | 8,00,000 | 10,00,000 |
| Plant and Machinery – Block of Asset | 10,00,000 | 15,00,000 |
| Land | 20,00,000 | 30,00,000 |
50% of the Plant and Machinery were purchased on the last date of the FY and depreciation has been claimed thereon assuming they were used for less than 180 days ?
Computing value of Assets for application of POEM Test – Non Resident Taxation – International Taxation Case Study – Solution :-
The value of the assets , for the purpose of test of POEM for different categories of asset has to be calculated as under : –
| Particulars | Value of asset |
| In case of a individually depreciable asset | Average of opening balance and closing balance of individual assets |
| In case of pool of fixed asset, being treated as a block for depreciation | Average of opening balance and closing balance of block of assets |
| In case of any other asset | Value as per books of account |
In view of the above provisions, the value is calculated as under : –
| Particulars | Value of asset |
| Computer – individually depreciable asset | 6,50,000 |
| Building – Block of Asset | 9,00,000 |
| Plant and Machinery – Block of Asset | 12,50,000 |
| Land | 30,00,000 |
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