Capital or revenue expenditure

Sonia M Ketkar (B.com CA DISA(ICA) Pursuing CS) (625 Points)

13 March 2014

The client is into construction business. One PWD Old pipeline is passing below the land of the constructor. Unless the pipeline is shifted construction is not possible. After requesting, PWD agree to shift the pipeline but at the cost of the constructor. Is the cost of shifting Revenue or Capital Expenditure??? Can this cost be recovered from PWD????

Thanks in advance

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CA Saroj Kumar (Keen to learn something new every moments) (2588 Points)
Replied 13 March 2014

the shifting cost would be capital expenduture and the cost which incured for shifting i think its not be recoverable bcs PWD does not required shifting they r agree just bcz of ur could not be possible if they do not do that. rather then u claim the same as capital exp. bcs its relate to ur main area of function suppose if any stone come into way of construction then what u will do ..u will remove this at ur construction unless or otherwise compensation clause is in contract agreement.same as is pipeline. hence the cost would be capax.