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Capitalisation of re-installation of machinery

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This query is : Resolved

Rohit Aggarwal (Querist)

29 December 2013 Hello Experts A client of ours shifted his factory from a location to another wjthin the same state. It incurred heavy shifting expenses. Also, all the machinery were dismantled from existing place and reinstalled at new place. My ques is whether these Shifting, Dismantling and Reinstallation expenses for machinery will be capitalised or not. Kindly refer to a case or section with your valuable opinions. Thanks in advance. Rohit

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)

29 December 2013 As per my view, it cannot capitalise, because it will be increase your value of fixed assets & lead additions or revaluation of the said asset. Expenses incurred on fixed assets can be capitalised only if such expenses will improve the expected future benefits from the fixed assets . so the expenses mentioned in the query is only the normal shifting expenses and not contain any capital nature, hence not to be capitalised

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