Capitalisation of items in a housing society

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Housing society expenses can be capitalized if they create a new asset or provide long-term benefits. UPVC partitions, new play area tiles, and permanent safety nets may be capitalized. Bird nets and partial paver replacement for leak repairs are generally treated as revenue expenses.

Krishnamurthy Natarajan

Krishnamurthy Natarajan (Querist)
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01 June 2026 Can the following be capitalised - expenses incurred in a housing society
1) Bird net on shafts to prevent birds from nesting, prevent bird dropping etc
2) Paver stones replaced in one part of the area to plug leakages in the basement
3) fixing of tiles to beautify kids play area
4) Nets fixed in the play area to prevent ball from going out of the premises
5) UPVC partition for a basement room

Thanks in advance
An additional piece of information. Neither the basketball court ( where the net is fixed on the periphery over the surrounding wall , nor the kids play area wall are capitalized in the books of the society separately. With the underlying assets not capitalized is there a change in position of treatment
Thanks

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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01 June 2026 The decision to capitalize expenses in a housing society depends on whether the work creates a new asset or provides a long-term benefit (Capital Expenditure), or if it merely maintains an existing asset (Revenue Expenditure).
In general, minor capital items (like single nets) are often expensed directly to the Repairs and Maintenance Fund if the value is low, to avoid tracking depreciation.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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01 June 2026 Here is the classification for your specific expenses:
Bird net on shafts: Revenue Expenditure. This is generally considered a maintenance expense to ensure hygiene and prevent nuisance. Since nets have a limited lifespan and are a recurring maintenance need, they are typically expensed.
Paver stones (to plug leakages): Revenue Expenditure. Replacing a portion of existing pavers to fix a leakage is classified as a "repair" to restore the asset to its original state rather than creating a new one. If you were laying an entirely new road or area for the first time, it would be capitalised.
Fixing of tiles to beautify kids play area: Capital Expenditure. If this is a new installation or a significant upgrade that increases the "beauty" and utility of the area for years to come, it creates a fresh advantage and should be capitalised. However, if you are just replacing a few broken tiles, it remains revenue.
Nets fixed in play area: Capital Expenditure (if new/permanent). If these are permanent fixtures installed for the first time to enhance safety and allow for sports, they can be capitalised as "Equipment" or "Improvements". If they are temporary replacements for old, worn-out nets, they are revenue.
UPVC partition for a basement room: Capital Expenditure. Creating a partition creates a new "room" or functional space within the building. This is an "addition or alteration" that provides long-term benefit and should be added to the society’s fixed assets

Krishnamurthy Natarajan

Krishnamurthy Natarajan (Querist)
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03 June 2026 thank you.. one more clarification - modified in the query.. the walls on which the tiles is fixed and the wall on top of which the next is fixed is not capitalised in society books. Can the net and tiles be capitalised without the base asset being capitalised. Thanks

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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03 June 2026 Initial mistake doesn't permit you to repeat it again and again. Nets cost may not be capitalized, but tiles construction should be.

Krishnamurthy Natarajan

Krishnamurthy Natarajan (Querist)
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04 June 2026 Sir, Thank you for your response. To reiterate, this is an apartment complex and all infrastructure has been collected as part of the flat cost from individual owners - such as STP, fire system, generators, lifts etc. These have not been identified and included as part of Common assets of the association

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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05 June 2026 These assets can be newly added to the associations BS, and even be depreciated.

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