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Construction cost of chimney

Sagar Agarwal (Article) (26 Points)

03 September 2014

Dear friends,

One of my clients has paid Rs. 10,000 as cost of construction for a chimney of which there is no bill. So now my query is whether i can show that chimney as a fixed asset??

Or i shall charge the same as a revenue expenditure and debit it in the Profit & Loss A/C?

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3 Replies

(Guest)

You have to give more information:

1. whether the amount was paid by cheque.

2.Is the client an individual, firm or company? is Audit applicable?

3. The chimney is constructed on the residential house or factory?

Sagar Agarwal (Article) (26 Points)
Replied 03 September 2014

Madhavi ji,

1.The amount was paid in cash.

2.The client is a private limited company and yes Audit is applicable.

3.The chimney is constructed on a hotel which is the main busuiness premises of the client.

Waiting for your reply..

(Guest)

In my view show the chimney as a revenue expenditure (repairs)as there is no supporting evidence and then disallow it while calculaing tax. If you show it as addition to hotel building( which is actually correct) there is no provision to disallow depreciation.

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