Allowability of Renovation expenditure under income tax

HMM, tough question My answer is purely on common sense and not based on any case law But infirst two of all the cases mentioned above the expense should be capitalised as benefit of the renovation will be enjoyed through a period of time which is more than one year, in case of furniture if it is repair work being done and not a making work or purchase then they may be taken as revenue expense.

and in third question, the expense cannot be capitalised and you have done it for the tenant and you are getting back the amount from tenant, so its not an expenditure on you. so in third question its not a revenue nor a capital expenditure in your hands
even am interested in a better answer than me,, so people, come on, answer this good question...

Now my question is how to account the third transaction, when you have spent for your asset and  rented it and your tenant will reimburse your expense in instalments

Nop, i have burnt my head, accounting such a transaction is tough, am getting no idea

Please people Solve this probelm

Dear Victor,

Keep it simple -

AS-10, Accounting for Fixed Assets says Assets should be recognised at cost less all discounts & rebates.

Further AS-12 Recongnition of Govt. Grants states that assets received at concessional rates should be recognised at their acquisition cost.

Entire 3 lac will be reduced from the asset at the beginning, nomatter this sum wil be received in piecemeal. Depreciation will be charged on the remaining amount, if any.

HMmm, yup, thats right, but here the whole expense is reimbursed, and that too in instalments (so, say expense is in feb and there are 4 instalments of 3 lac each, so how you account), so, the asset will exist in real but not in books if we apply AS10 and AS 12 together.... then how do we account it?

Dear Victor,

Debtor shall be raised and Fixed asset account should be crdited with the entire contracted amount.

ya, mr.amir is rite.the follg. entry must b used

Amount Receivables A/c      Dr.             3L

       To FA                                                                    3L

hi victor

                   in the entry posted by me, i have taken 3L as the total amt receivable from tenant. in case of instalments, suitable entries must be posted at the time of receipt of each instalment(say .75l in 4 instalments)

As per the new ammendment, there is no need to renew the 80G registration. So is there any endorsement or corrections has to be made in the 80 G certificate , as it has shown the expiry date.Please guide me in this regard