29 October 2012
As per AS-10 "An item of fixed asset comprises its purchase price, including import duties and other non-refundable taxes or levies and any directly attributable cost of bringing the asset to itsworking condition for its intended use". So accordingly, if it is paid before acquring the property then will be attributed to the cost of the fixed assets and if not, then will be expensed out. It is the accounting standard which is to be seen and income tax has nothing to do with the capitalisation of the item.
The property in question was subject to dispute after it was purchased. So, the company paid legal fee after aquiring the same in order to protect the title.
29 October 2012
Dear Mr. Sahil, The property was in dispute before the aquring the assets then you have paid the legal fees to clear the dispute and to acquire the asset legally. it will be capitalised to the cost of the assets.
CAclubindia
