Is expenditure during construction period, like travelling,

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CA Karun Gupta (Querist)
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04 April 2009 Is expenditure during construction period, like travelling, boarding, lodging of employees, which is capitalised to the cost of the asset liable to FBT?

CA. B.SRINIVASULU

CA. B.SRINIVASULU (Expert)
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04 April 2009 These items like travelling, boarding, lodging of employees cannot be capitalised and should be debited to p&l account and threfore FBT will be applicable automatically.

The costs which will increase the value of the assest has to be capaitalised.

Taranjit Singh

Taranjit Singh (Expert)
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04 April 2009 Till now we advise client to capitalise expenditure during construction period till comencement of Production.Allocate directly related exp. to the respective asset & balance exp. on proprtionate basis.[As per guidance note]

But now,Guidance Note on Treatment of Expenditure during Construction Period has been withdrawn (19-08-2008)as the same is no longer relevant in the present day context.

So it will depend upon circumstances.

Taranjit Singh

Taranjit Singh (Expert)
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04 April 2009 https://www.finsys.co.in/ecirculars/FBT%20-%20%20for%20FSIA%202%20pg%20%20Sept2008.pdf

In the link, please read the 9th point of pre operative expenses, may be it is like the situation you want to know.

Taranjit Singh

Taranjit Singh (Expert)
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04 April 2009 FURTHER YOU CAN NOTE THAT.....

Any expenditure incurred for the purposes referred to in clauses (A) to (P) of subsection (2) of section 115WB is liable to FBT irrespective of whether such expenditure is incurred prior to commencement of the business or thereafter.
If you have still any confusion please ask anything, welcome.

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