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D. Murali

"Any attempt to treat working horses for taxation purposes as stock-in-trade in one year and as a fixed capital asset in another should be resisted."

FIRST there was the `cash-on-camera', and now we have the `most shameful episode in India's five decades of democracy.' And the thing is stinging both ways in the `tape for tape' affair and Toms are peeping through keyholes from both ends. Amid all the commotion, there are those simple accountants who are facing too many questions from the lay: Whether Rs 45 lakh was a correct valuation in horse-trading?

Before we get busy with the numbers, it would be proper to understand that the phrase means hard bargaining. As the Encarta defines, horse-trading is "a negotiation that involves hard bargaining and mutual compromise, shrewdness, and sometimes unscrupulous tactics such as secret or unofficial deals." There are accounting standards for valuation of inventories, investments and so forth, but there are no authoritative pronouncements on the valuation of horses. For the desperate seekers, there is some input on the UK's Inland Revenue site: "Working horses may be treated either as stock-in-trade or as a fixed capital asset." (You may wonder whether a defecting legislator can be called `working' or `sulking'.) "Where the latter basis is adopted the cost of a home-bred horse added to working horses may be estimated at 85 per cent of its current market value." (Try a simple math: If Rs 45 lakh is 85 per cent, what is the full value?) "Any attempt to treat working horses for taxation purposes as stock-in-trade in one year and as a fixed capital asset in another should be resisted."

A professional `equine appraiser' (what we loosely call horse valuer) emphasises how at some point in a horse-owner's life, "situations may occur that are unforeseen and require you to prove the value of your horse." How true! "This is when you need a professional horse appraiser who is compassionate and can advise you of the proper process and procedures." Current market value is defined, for horse-y purposes, as "the highest price, estimated in terms of money, that an informed buyer would pay for a particular horse on any given day."

In some cases, where the client wants, a veterinary exam is performed and the appraiser prepares a statement of the horse's physical condition. "This is especially useful for an older horse or when the value that the client believes the horse to hold does not bear out in the comparable market analysis." If only some medical check-up had been made before offering almost half-a-crore, or if only they had thought of hooking the middleman on to a lie detector, how different the turn of events could have been!

Another useful site would be www.agric.nsw.gov.au. A page titled "judging horses" defines a good horse as one that is able to perform its given function most adequately and is structurally sound. "The better horses are also well balanced."

This can help you judge whether, in episodes of the recent types, the horse that presents itself with a pricey proposal is a good or better horse, or plain greedy.

SayCheek@hotmail.com

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