Pre-operative expenses
This query is : Resolved
19 February 2013
What should be the treatment of Trial-Run Expenses (consisting of all revenue expenses). Will these be capitalised by apportionemet in Fixed Costs??
19 February 2013
It should be capitalised as an indirect element of the construction cost.(Para 9.3. of AS-10).But,the expenditure incurred after the plant has begun commercial production, is not capitalised
19 February 2013
Dear Neha,
such expense should be capitalized.
For the tax treatment the same has been validated by Supreme Court in the case of Challapalli Sugars Limited Vs. CIT (supra) and CIT Vs. Hindustan Petroleum Corporation, (1975) 98 ITR 167.
Another recent ITAT (delhi bench) judgment in the case of Cosmic Kitchen Pvt Ltd v ACIT (ITA No. 5549/Del/2010) also relied on the above judgments to rule in the similar treatment of pre-op or trial run expenses.
such expense should be capitalized.
For the tax treatment the same has been validated by Supreme Court in the case of Challapalli Sugars Limited Vs. CIT (supra) and CIT Vs. Hindustan Petroleum Corporation, (1975) 98 ITR 167.
Another recent ITAT (delhi bench) judgment in the case of Cosmic Kitchen Pvt Ltd v ACIT (ITA No. 5549/Del/2010) also relied on the above judgments to rule in the similar treatment of pre-op or trial run expenses.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- About TDS & Income Tax
- Tax on Deemed Capital Gain
- Scrutiny and reopening of past returns
- F & O PROFIT REPORTING FOR AY 2026-27
- Booth for sales promotion
- Type of Capital Gain
- Regarding ITR filing with more value than showing in AIS/TIS
- ASMT-10 received from A O
- Rental income of jointly held property
- Accounting with Claude
- Difff in ais receipts and gst turnover
- ITR-3 File/Error Found
- Exiting partner in partnership firm in gst portal
- Taxability of credit in canara bank ET & T section (NRO)
- Consequences of Non-Deduction of TDS under Income Tax???????????????
- TDS on Rent received on redevelopment of building
- Indian IT Portal issue in computing tax as per UK-India DTAA
- Capital Gains on sale of residential flat
- Upload Level ValidationITR3Category of Defect B/D
- PF Taxable Income
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
