capitalization of Interest on loan

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SREE PRAKASH (Querist)
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06 September 2009 Sir
An assesse has constructed a building for his profession and he got building number etc in march 2009, but the inaguration of the building was in April 2009. Please clarify whether he can treat interest on loan taken for construction can be treated as revenue in the financial year 2008-09.Can he charge depreciation in 2008-09?
Sree prakash

Late CA Sampat Jain

Late CA Sampat Jain (Expert)
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06 September 2009 DEPRECIATION ON A ASSET CAN BE CLAIMED ONLY AFTER IT IS PUT TO USE.....IF THE BUILDING WAS PUT TO USE BEFORE INAUGARATION ......DEPR CAN BE CLAIMED ACCORDINGLY.

INTEREST COST FOR UPTO THE DATE OF ACQURING ASSET IS CAPITAL , THEREAFTER IT IS REVENUE.

Where the asset was bought on the last day of the accounting year - Where the cars were bought on the last day of the accounting year and had not been registered for being brought on roads, and there was no evidence of the assessee having used those cars before the end of the accounting year in the business of the assessee, the Tribunal was clearly in error in holding that the assessee was entitled to depreciation in respect of these vehicles - CIT v. Maps Tours & Travels [2003] 260 ITR 655/[2004] 141 Taxman 38 (Mad.).

Steps taken to set building into gear are â€˜putting it to useâ€™ - After arranging for the building, any steps taken by the entrepreneur to set the building into gear for running the unit, would be nothing but putting it to â€˜useâ€™ - CIT v. O.P. Khanna & Sons [1983] 140 ITR 558 (Punj. & Har.).