interest

Pre Construction Period Interest  as AS 16 Borrowing Cost,  Should be Capitalised.

under the Income Tax Pre Construction interest Allowed Deduction in 5 Years.  

Dear tarun,

Accounting for borrowing costs (AS 16): AS 16, on borrowing costs, requires the interest attributable to acquiring the qualifying asset to be capitalised and added to the cost of the asset till such time the asset is brought to a usable condition, subject, however, to certain terms and conditions for suspension of such borrowing costs.

Even income-tax act also provide for similiar treatment. The interest upto the date of asset is put to use has to be capitalised as cost of the fixed asset.

Regards

Kanti Jain

Agreed with Mr. Kanti Jain