Assets Capitalisation and Depreciation

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If a contractor leaves work unfinished and you hire a new one, you can still capitalise assets and claim depreciation, even without the original contractor's bills. You'll need to create a liability in your accounts based on the work done and contract terms. The income tax authority won't determine the value; you must establish it based on the execution of work and contractual agreements.

Aanand Jha

Aanand Jha (Querist)

29 September 2023 Due to some reason reason / Dispute, Contractor "A" left work pending. We hired some another Contractor 'B" for completion the work. Assets have also been put to use.

We do not have the bill's from previous Contractor "A", Can we capitalise Assets and claim depreciation?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

29 September 2023 Yes, capitalise assets and claim depreciation as you are using it.

Aanand Jha

Aanand Jha (Querist)

29 September 2023 Thanks
How the Income Tax Authority determine the Value. Loan was directly disbursed to Work Contractor. He has not Paid GST and not raised any Bill. What Cost has to be taken in books of Account. What will be the Value of Costing?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

29 September 2023 Income tax authority will not determine value.
You have to create liability in the books of accounts based on work execution and contract terms and capitalise in the books of accounts.

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