Non profit organisation
This query is : Resolved
08 September 2008
We buy boats . . Average life of the boats is 2 to 3 years. . We import that specially for sporting purpose . .
Boats are not usefull after 6 months for any championship tournaments. .
We can use that only for training purposes . .
That too cannot be used for practising for tournamets. .
We import every year . With concession of customs through yatching association of india . .
We are a registered society
Our bylaws silent about capitalization
Why cannot i take buying of boats as revenue expenditure
Depreciation rate prescribed by income tax department is not in logic
Please somebody solve this with reference
Whoever answers keep this as open query
Also mention if there is any caselaw regarding this
Boats are not usefull after 6 months for any championship tournaments. .
We can use that only for training purposes . .
That too cannot be used for practising for tournamets. .
We import every year . With concession of customs through yatching association of india . .
We are a registered society
Our bylaws silent about capitalization
Why cannot i take buying of boats as revenue expenditure
Depreciation rate prescribed by income tax department is not in logic
Please somebody solve this with reference
Whoever answers keep this as open query
Also mention if there is any caselaw regarding this
08 September 2008
You are mentionong that the Boats have an average life of two to three years, but at the same time saying that the boats are not useful after six months. Are these statements not contradictoing?
Mpreover, there is nothing like holding some thing as capital or revenue. A thing which is a capital item may be revenue for some one else.
It is the nature of business that determines an item as capital or revenue.
Mpreover, there is nothing like holding some thing as capital or revenue. A thing which is a capital item may be revenue for some one else.
It is the nature of business that determines an item as capital or revenue.
09 September 2008
can i consider this capital expenditure for 85% of EXP for tax benefit
09 September 2008
can i consider this capital expenditure for 85% of EXP for tax benefit
09 September 2008
Dear Chezhiyan,
Firstly you have to know the defination of capital expenditure and revenue expenditure.
Capital expenditures (CAPEX or capex) are expenditures creating future benefits.
Revenue Expenditure Outlay benefitting only the current year.This is lay man defination.
As you are saying boat average life is 2 to 3 years.So,according to the diffination boats is falling under the capital expenditure defination.
As you are saying boat is not usefull after 6 months and according to you after that its scrap ... so u need to give a documentary proof.. and you need to charge 100% depreciation but you cant use as a revenue expenditure.
Hope you are satisfied with my answer
Firstly you have to know the defination of capital expenditure and revenue expenditure.
Capital expenditures (CAPEX or capex) are expenditures creating future benefits.
Revenue Expenditure Outlay benefitting only the current year.This is lay man defination.
As you are saying boat average life is 2 to 3 years.So,according to the diffination boats is falling under the capital expenditure defination.
As you are saying boat is not usefull after 6 months and according to you after that its scrap ... so u need to give a documentary proof.. and you need to charge 100% depreciation but you cant use as a revenue expenditure.
Hope you are satisfied with my answer
09 September 2008
Dear Chezhiyan,
Firstly you have to know the defination of capital expenditure and revenue expenditure.
Capital expenditures (CAPEX or capex) are expenditures creating future benefits.
Revenue Expenditure Outlay benefitting only the current year.This is lay man defination.
As you are saying boat average life is 2 to 3 years.So,according to the diffination boats is falling under the capital expenditure defination.
As you are saying boat is not usefull after 6 months and according to you after that its scrap ... so u need to give a documentary proof.. and you need to charge 100% depreciation but you cant use as a revenue expenditure.
Hope you are satisfied with my answer
Firstly you have to know the defination of capital expenditure and revenue expenditure.
Capital expenditures (CAPEX or capex) are expenditures creating future benefits.
Revenue Expenditure Outlay benefitting only the current year.This is lay man defination.
As you are saying boat average life is 2 to 3 years.So,according to the diffination boats is falling under the capital expenditure defination.
As you are saying boat is not usefull after 6 months and according to you after that its scrap ... so u need to give a documentary proof.. and you need to charge 100% depreciation but you cant use as a revenue expenditure.
Hope you are satisfied with my answer
15 November 2008
whether you capitalise or not it does not make any difference because for taxation of trust the amount spent on buying assets are taken part of 85% expenditure
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