Accounting for renovation expenses for rented office premise
This query is : Resolved
Ananya Sachdeva
(Querist)
14 June 2013
Hi, we have spent 2lakhs on tiles, wallpapers, paint and other renovation expenses for our office premises. we are paying 60000pm as rent for the office. I would like to know whether this expenditure for renovating would be capitalized, why or why not? and if yes then how?
14 June 2013
I dont think this expense can be capitalised. It is revenue in nature because it is a sought of an upkeep.
it may be taken as capital exp., if major structural changes are made.
it may be taken as capital exp., if major structural changes are made.
14 June 2013
Supreme Court in the case of CIT vs. Madras Auto Services Pvt Ltd. [1998] 233 ITR 468 held that expenditure on wall papers, partition wall, marble flooring etc; is not in the nature of capital expenditure.
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Ananya Sachdeva
(Querist)
14 June 2013
not exactly major changes are made, but yes a big amount is spend on the interiors of our office. if this amount is to be capitalized then should i consider it as addition to furniture and depreciate as furniture or some thing else?
Rupesh Jain
(Expert)
14 June 2013
no it is revenue exp.
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