OFFICE DECORATION EXPENSES

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

17 August 2010 A FIRM WITH TURNOVER AROUND 8 CR.

HAD PAID RS. 9 LACS A OFFICE DECORATION EXPENSES,
WHEATHER THIS EXPENSES SHOULD BE CAPITALIZED OR CHARGED TO pl aCCOUNT
.

ACTUALLY OFFICE IS RENTED. SO IF CAPITALIZED, NO SCOPE IS THERE.

GSTP Hari Dhayalan Konar

GSTP Hari Dhayalan Konar (Expert)
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17 August 2010 debit to p/l a/c.

Aditya Maheshwari

Aditya Maheshwari (Expert)
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17 August 2010 In case of expenditure on leased premises in order to make it fit for assessee’s business, if any extra facility was created by way of brick works and connected expenditure, the same would be a capital expenditure eligible for depreciation under explanation 1 to section 32(1) and if not, the expenditure would be revenue in nature covered by section 30(a)(ii).
Dy. CIT vs. EDS Electronic Data Systems (India) (P) Ltd. (2009) 23 DTR 10 (Del.) (Trib.)

CMA. Subhash Kumar Jha

CMA. Subhash Kumar Jha (Expert)
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17 August 2010 If these expenses (decoration etc) are in the nature of fixtures, then it should be capitalized & to be written off over the current lease period.

But, if these exp are purely in the nature of maintenance etc then it should be debited to PL A/c.

Querist : Anonymous

Querist : Anonymous (Querist)

17 August 2010 BUT IF BUILDING IN BOOKS, THEN CAN BE CAPITALIZED,

WHAT IS CRITERIA,\

I MEAN " KYA HOTA TOH CAPITALIZED HOTA"

Querist : Anonymous

Querist : Anonymous (Querist)

17 August 2010 ANOTHER QUESTION -

WHEN MOTOR CAR PURCHASED, THERE IS INSURANCE CHARGES, ROAD TAX, REGISTARTION CHARGES AND SAY PROCESSING OF LOAN CHARGES,

IN WHICH AMT. TO BE CAPITALIZED.

Aditya Maheshwari

Aditya Maheshwari (Expert)
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17 August 2010 visit this link
https://gaj-india.com/usefulupdates/samerevenue.pdf

CMA. Subhash Kumar Jha

CMA. Subhash Kumar Jha (Expert)
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17 August 2010 If the expenses are in the nature of fixtures like blinds / false ceiling / tiles / decorative electrical fittings , then it should be capitalized & to be written off over the current lease period.

otherwise... directly debit to PL A/c

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CMA. Subhash Kumar Jha

CMA. Subhash Kumar Jha (Expert)
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17 August 2010 in the case of motor car, the whole amount is to be capitalized.

Querist : Anonymous

Querist : Anonymous (Querist)

17 August 2010 JHAJI,
U MEAN CAR INSURANCE CHARGES PAID, ROAD TAX PAID, WHICH ARE FOR CERTAIN LIFE LIKE INSURANCE FOR 1 YEAR, ROAD TAX FOR 5 YEAR THEN THESE ALSO TO BE CAPITALIZED,

I THINK THESE SHOULD BE CHARGED TO PL ACCOYUNT.

Aditya Maheshwari

Aditya Maheshwari (Expert)
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17 August 2010 Capitalise first insurance paid and other expenses to be incurred at the time of purchase of motor car.

Querist : Anonymous

Querist : Anonymous (Querist)

17 August 2010 SIR ANY CASE LAW RWGARDING THAT.,.,,,

THAT FIRST INSURANCE ROAD TAX..SHOULD BE CAPITALIZED

Aditya Maheshwari

Aditya Maheshwari (Expert)
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17 August 2010 No case law general accounting and compliance of AS - 10.

Aditya Maheshwari

Aditya Maheshwari (Expert)
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17 August 2010 They are treated as expenses incurred for bringing the assets to its intended use as the car cannot leave the showroom without insurance and hence capitalised.

CMA. Subhash Kumar Jha

CMA. Subhash Kumar Jha (Expert)
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17 August 2010 Any payment at the time of purchase of Motor vehicle, needs to be capitalized only. Pl Refer AS-10

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