Capitalization of interest on heavy vehicle

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This discussion clarifies whether interest on a loan taken specifically for constructing a heavy vehicle's body can be capitalised. The consensus is yes, provided the construction is completed and the vehicle is put to use within 12 months. It also touches upon the criteria for a 'Qualifying Asset' and whether a shorter construction period still allows for interest capitalisation.

Rosario Melvin

Rosario Melvin (Querist)
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08 June 2024 I have taken a specific loan for constructing the body of Heavy vehicle. Can i capitalize the interest of loan, if the vehicle is constructed and put to use within 12 months?

Kindly rectify my query, it will be grateful. Gratitude in advance.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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09 June 2024 Yes, you can capitalise such construction period interest.

Rosario Melvin

Rosario Melvin (Querist)
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10 June 2024 what if it does not satisfies as an "Qualifying Asset"? In my question, the construction of vehicle's body has not covered the substantial period of time for intended to use. Still can I capitalize the interest?

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