Capitalisation

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Querist : Anonymous

Querist : Anonymous (Querist)

16 April 2010 If a company engaged in IT services purchases RAM and other hardwares worth less than Rs.5,000 which increase life of computers by 1-1.5 yrs can be expensed off or should be capitalised?
Total of such purchases over the year amounts to more than Rs.20 lacs.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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16 April 2010 Can be capitalized and since the actual cost is less than Rs.5,000/- depreciation at the rate of 100% can be claimed under the Companies Act,1956 provided the aggregate cost of such items will not constitute more than 10% of the total actual cost of plant and machinery of the said company

CA Shiv

CA Shiv (Expert)
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16 April 2010 as per my advice its need to be expensed out as amount isv ery small as repair and maintanance exp. i hope its recurring amount of below INR 5k... no need to capitalise. as have to think from income tax point of view also..

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