Revenue Exp
This query is : Resolved
02 May 2008
Assessee purchased a new electric motor for supplying raw material to the machine inlieu of rewind of old motor. Rewinding is not possible for many times hence after 2-3 rewinding assessee has replaced it. As per my opinion it is revenue exp whether my contention is right? Please elaborate
Hari Venkata Ramana
(Expert)
03 May 2008
for treating an expenditure as Capital or Revenue the creteria to be followed is whether,
The useful life of the equipment is being extended or not,
If the useful life is extended due to replacement with new motor you can treat it as capital expenditure.
To treat the same as revenue expenditure you may have to interprete that, the useful life of the equipment after replacement of new motor remain unchanged.
The useful life of the equipment is being extended or not,
If the useful life is extended due to replacement with new motor you can treat it as capital expenditure.
To treat the same as revenue expenditure you may have to interprete that, the useful life of the equipment after replacement of new motor remain unchanged.
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