It depreciation on new project

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This query is : Resolved

Jayant (Querist)

02 March 2013 We are setting up new project and hope to start trail run production in March 13 .

Howvere, our factory building is still under construction and may not complete by March.

Can we claim Depreciation for buldg which is still under construction if we are able to produce something and also on testing and some other equipments which may not be used in trail run.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

02 March 2013 In case the Building is not completed, there is no such urgency, requirement and validity in claiming depreciation.
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You are able to produce something does not mean that you have "put to use" the machinery items.
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The matter may be postponed till completion of the building and till the machinery gets adequately ready for production.
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Jayant

Jayant (Querist)

02 March 2013 Dear Sir,

Thanks for your reply . But if we postpone till completion of Buldg. we will loose IT dep. benefit for 6 months. Hence my querry is whether we can claim dep on Bulg - WIP stage and on machinery as we could able to strat production although entire production cycle is not completed.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

02 March 2013 The IT benefit in respect of building will be available only when you show that the construction of the building is completed.
However, there is no meaning in claiming such depreciation as the same will be treated as a pre-operative cost and required to be re-capitalised.
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