Capital Expenditure how to show in Income & Expenditure

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This discussion clarifies how capital expenditure should be treated for accounting purposes. While it qualifies as an application of income under section 11, it should be shown on the balance sheet as a fixed asset, not on the income and expenditure account. A separate working will be prepared to demonstrate the 85% utilisation of funds, encompassing both capital and revenue expenditure.

Ajay Gupta

Ajay Gupta (Querist)

04 March 2024 As per section 11, even capital expenditure will be allowed as application of income and fulfills condition of 85% utilization/application of income.

My query is:
1. If capital expenditure is allowed as application of income then whether we need to show this in income & expenditure account (Expenditure side) or in balance sheet (fixed assets)?
2. If shown in balance sheet then income expenditure account will show huge surplus and then how we will show that 85% condition has been met.

CA Rashmi Gandhi

CA Rashmi Gandhi (Expert)

05 March 2024 There is separate disclosure required for Capital and revenue expenditure. So you need not required to show the expense the expense in income & expenditure account.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

05 March 2024 1 Show it in balance sheet.
2 For 85% working for application of funds separate working will be made including capital and revenue expenditure.

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