Hi guys, I've a query and was wondering if any of you could help me out. I'm building a website which will be selling digital content like articles on a monthly subscripttion. Now, my query is whether the cost of development (salary expense) be capitalized and subsequently depreciated at the rate of 25% under the IT act 1961. For instance, I hire one developer and pay him Rs.1 lakh salary per month. Can I capitalize this cost for a period of 6 months (the web development period) and claim depreciation from the 7th month onwards?
Also, after 6 months I do intend to put the product to market but on a beta launch basis. The product will continue to undergo development after beta and many new features will be progressively added to it. Should this new feature or product development cost be capitalized and claimed as a deprecation charge instead of writing off the entire salary expenditure to P&L?
I'd be grateful if someone can help me out here. Thanks
CAclubindia
