Capitalisation of Stamp Duty paid towards Loan obtained

This query is : Resolved

LOKANATH K (Querist)
Follow

05 March 2009 A Machinery was purchased which is not a qualifying asset as per AS 16. A loan was obtained to purchase the machinery. While the loan was obtained, Stamp Duty Charges were incurred.

Pls clarify whether the Stamp Duty Paid for obtaining loan can be capitalised?
or
stamp duty charges can be treated as borrowing costs and accordingly charged to P&L Account as the machinery is not a qualifying asset?

CA LOKESH KASAT, FCA, M.Com

CA LOKESH KASAT, FCA, M.Com (Expert)
Follow

05 March 2009 You can capitalize

LOKANATH K

LOKANATH K (Querist)
Follow

05 March 2009 As per AS 10, any costs directly attributable to bringing the asset to its working condition for its intented use, can only be capitalised.

And finance and borrowing costs (Ancillary costs such as Stamp Duty, Processing Charges, etc. are also included in the finance & borrowing cost )can be capitalised and included as an element of cost of Fixed Asset, provided the asset is qualifying asset under AS 16.

In my case, the asset is not a qualifying asset. How can i capitalise?

plz support your answer with proper supportings

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now