does renovation cost are capital expenditure ??
Menu
Does renovation cost are capital expenditure ??
Replies (18)
Quick Summary
Revenue Expenditure .........
Same is capital in nature.
Normally ,Whatever Expenditure we incurred towards Aseet before that Aseet put to an use , will be treated as capital expenditure .
Yes but assets which will last for more than one year is also capital expenses. here renovation is not for one particular year, so same is required to be capitalised.
But Accounting Standards 10 (AS10) , talks only about " expenditure we incurred up to Asset put to an use " will be Capitalise.
As per AS 10, the cost of property, plant and equipment of a business entity may include the:
- initial cost to acquire or construct an item of property, plant and equipment
- Subsequent costs of adding, replacing or servicing the property, plant and equipment so acquired
Some of the Case law .
1) Expenses for Renovation and Redecoration of Hotel Rooms , Constitute Revenue Expenditure - Honorable Madras High- Court in case of Pandian Hotels .
2) Repair or Renovation expenditure on Make up rooms is revenue expenditure , Maharashtra Film culture Development Corporation Vs JCIT - Honorable High court judgement
some more case laws wherein honorable court has decided as Renovation expenditure is Revenue in nature .
In my opinion , Renovation Expenditure may be Capital Expenditure , however in Certain cases it may not if you refer above case laws .
Yes same thing I want to say, depending on nature it may be capitalised or revenue. But generally building renovation is considered as capital expenses
Respected Madam , but in query it is not clear for what purpose they have incurred Renovation Expenditure .
Agreed with you, I just assumed it. We both are correct on our points.
So mam what are the factors it depends upon ?
Quantum of transction and period of use
The quantum of expenditure is not pertinent. It is necessary whether the expenditure increases the useful life of the asset and by how much. Different cases are there in various court of law citing
Recent Topics :
- Foreign remittance
- Affordable Residential Flats in Gurgaon
- Manufacturing
- TAN REGISTRATION ON E-FILLING SITE
- Form 10-IEA – Continuing Old Regime
- Income tax act 2026
- Belated Return where Form 10IEA filed this year to
- GST Reconciliation Tool (2A vs Books) - looking fo
- TDS ON PF FORM 19 WITHDRAWAL
- Can a virtual office in Mumbai be used for company
Related Topics :
CAclubindia
