M/C Component to be Capitalised or Revenue
This query is : Resolved
20 January 2010
Sir, suppose there is a M/C having Cost of Rs 10,00,000 in which a component (component has life of 3-4 yrs) having value of Rs 2,00,000 gets damaged and is replaced by another component of the same quality costing Rs 2,50,000(Increase in price from 2,00,000 to 2,50,00 owing to External factors like Inflation, Demand Supply factors etc.). The estimated life of the new component is the same as that of the old one,i.e., 3-4 yrs. So will the Expenditure on new component be treated as a Revenue Expenditure or Capital Expenditure????
NISHIT A. DOSHI
(Expert)
21 January 2010
it should be treated as a revenue expenditure as the same is not increasing any productivity of the machine.
WITH REGARDS,
C.A.NISHIT DOSHI
WITH REGARDS,
C.A.NISHIT DOSHI
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