Internet cable network expenses

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

02 December 2014 Hi

We are in rented office space. Our is Hyderabad based private limited co. (IT service provider) For internet network cable to 40 workstations, we have incured around Rs. 80,000 including material and service charges. How to treat this expenses. Is it capital expenses? if so, under what heading it has to be accounted. If it is indirect expenses, please tell about the expense heading too.
Please suggest

Amol S Joglekar

Amol S Joglekar (Expert)
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02 December 2014 You can capitalise the expenditure. Internet network mesh and claim depreciation at 15% (This is with the assumption that the work stations are rented one)
If the workstations are owned by your company, you can very well add the cost of cable to workstations for the simple reason without cable you can NOT operate the workstations for the purpose for which they are purchased(IT service)

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Querist : Anonymous

Querist : Anonymous (Querist)

02 December 2014 Thanks a lot. Under which account head it has to be capitalised. Please inform

CA Kumar Mukesh

CA Kumar Mukesh (Expert)
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03 December 2014 Treatment As per Companies Act you need to capitalized these expenses as capital asset under the head of office/computers equipments and charges the depreciation according to expected life the asset.

Treatment under Income Tax Act. capitalized the same under the head of computer and computer equipment and claim depreciation at 60% as claimed for computers as decided by Honorable Delhi High Court in case BSES Yamuna Limited.

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