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Accounting treatment for hiring charges

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(Querist)
17 February 2010 Hi Sir,

A Pvt. Ltd. co is paying hire charges for dsektop computer(rental charges) monthly for 25 computers around Rs. 21875/-. in the bill bottom it is mentioned in bracket that (not for sale, returnable basis only). what is accounting treatment for it. should we treat it as expenses or capitalised it. Pls mail me your valuable sugession foe the proper head in moinkhan685@gmail.com

Thanks and Reagards

MOIN
9035197685
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CA Chitresh Gupta

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CA Chitresh Gupta (Expert)
17 February 2010 As yu have stated that the company is paying the hire charges only. It means the company has taken the computers on rent and does not have any onwership right on the same. The computers will also be returned to the supplier/ landlord on complition of contract.

In my view since, the company does not have any vested interest in computers apart from rent. The hiring charges should not be capitailsed.

These should be shown as computer hiring charges in P/L account. A TDS @ 2% will be applicable on this u/s 194I


Regards
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CA Chitresh Gupta

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CA Chitresh Gupta (Expert)
17 February 2010 As yu have stated that the company is paying the hire charges only. It means the company has taken the computers on rent and does not have any onwership right on the same. The computers will also be returned to the supplier/ landlord on complition of contract.

In my view since, the company does not have any vested interest in computers apart from rent. The hiring charges should not be capitailsed.

These should be shown as computer hiring charges in P/L account. A TDS @ 2% will be applicable on this u/s 194I


Regards
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