Capital assets

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

20 March 2013 What is difference between Capital Expenditure and Revenue Expenditure? How the same as treated in Income Tax?

Our firm has hired a Professional Designer for repairs and renovation of our office. The fees paid to the Designer is to considered as the asset or the expenditure pls. explain in detail. Thanks.

Prakash Tolani

Prakash Tolani (Expert)
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20 March 2013 Revenue expenditure is allowed as deduction in profit and loss account

capital expenditure is not allowed but you can claim depreciation on it.

There is very thin line between revenue and capital expenses, only one test: If life of asset has increased after expenses, then it is a capital expenditure otherewise revenue

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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20 July 2013 Capital Expenditure is shown in the Balance Sheet and on the same depreciation as per prescribed rate is allowed whereas the revenue expenditure are directly debited to the P & L A/c and can be adjusted against the gross profit on which no Income Tax is payable.

The fee is revenue expenditure as no new assets has been purchased. The existing assets has been repaired with the help of the consultant.

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