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AS-10 Vs Income Tax

This query is : Resolved 
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(Querist)
26 January 2011 Dear Sir,
Please consider this issue:
A company enter into Agreement for taking premises for a Rent of 5 Years. During second year, the company made Renovation and Extention, Partition of Card boards, fixing of Electrical fittings, build a floor, tiles etc., After end of 5 years the Rental Agreement will be proposed for Renewal also.
Query:
1. Whether this Renovation expenses are qualified for Capitalisation as Per AS-10? Since, if Agreement is terminated, the company does not own any part of the Premises.
2. According to Income Tax Act, whether this Renovation expenses are should be capitalised and can claim Depreciation or it should be write off in the year in which it is incurred?
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CA Shailesh Kumar Bhagat

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CA Shailesh Kumar Bhagat (Expert)
26 January 2011 1. Exp can not be capitalised. It is not a finance lease, you are not charging depreciation on premises.

2. No captalization.
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