Interest on partners capital
This query is : Resolved
15 July 2017
A partnership firm has started installing Plant and Machinery in F.Y. 2016-17 but installation is not completed till 31st March, 2017 so production was not started till 31st March, 2017 and production is start in July 2017. Firm paid interest on capital to partners on their capital investment in firm for purchase and installation of Plant & Machinery and construction of factory building. Whether interest paid to Partners on capital for above purposes is treated as capital expenditure and capitalized the same in firm books of accounts or treat as revenue expenditure pls. reply
15 July 2017
It may be considered as capital expenditure.
15 July 2017
Thanks for your reply sir and further my query is that sir in above case bank charges and stationery exp. paid also can be treated as capital expenditure because no production stated in F.Y. 2016-17 and no Income /Revenue earned.
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