Yes, this is expected behavior for a Storable Product with Automated (Perpetual) Valuation.

In this configuration, the vendor bill line is typically posted against the product's stock/interim valuation accounts rather than directly to the Purchase Expense account. As a result, any tax logic that evaluates the vendor bill line account will see the Closing Stock / Stock Valuation account.

However, from an accounting perspective, TDS Section 194Q is not related to the nature of the account (expense vs stock asset). It is related to the purchase transaction from the vendor and the applicable tax provisions.

Therefore, if Odoo's standard TDS computation relies on the account configured on the vendor bill line, then assigning the TDS section to the Closing Stock account may be necessary for the standard functionality to detect and apply Section 194Q on inventory purchases.

The important consideration is consistency:

• If inventory purchases are posted to the Closing Stock account, the TDS section should be available on that account for the threshold calculation to work.

• If service purchases or non-stock purchases are posted to expense accounts, the TDS section should also be configured on those accounts where applicable.

In other words, for a standard Odoo setup with AVCO and Perpetual Valuation, configuring Section 194Q on the Closing Stock account is acceptable if that is the account used by the vendor bill lines and the standard TDS engine evaluates transactions based on the account configuration.

This does not change the accounting nature of the Closing Stock account; it only enables the TDS logic to recognize qualifying purchase transactions posted through that account.