Purase of HDD

Capitalise an expense for improvement of an asset if it has the effect of

a) increasing capacity/efficiency beyond original capacity/efficiency or both; or

b) Extending the useful life of the asset; or

c) Long term cost reduction in its operation; or

d) necessary to install a fixed asset and use it

Expense it off if it does not fulfil these conditions. You can treat the same as repairs to computers

But being a new asset (I assume since you say external hard disk drive), you would have to capitalise the same at the cost of purchase, less any VAT or other taxes which can be recovered by you. 

You may note that Schedule XIV to the Companies act allows an asset to be depreciated fully in the year of purchase only if its value is below Rs. 5000/-. Hence i advise you to capitalise.

But its an EXTERNAL HDD and not an internal one

Can i still capitalise it?

Yes, i think you can because it provides you a new asset - storage capacity.

Please do look for accounting policies of the organisation in this type of matter.. Its an asset to be capitalised and depreciated in my opinion.

As it is an external HDD, you have to capitalise it at its life extends over a year and also the amount of it is more than Rs.5000. In case it had been an internal hard disk, it cant be capitalised as it doesnot amount to addition in the fixed asset. Its an improvement in fixed asset. So in your case, the external HDD needs to be capitalised.

However, you can take a different veiw if the management intends to use the same for one year only. In such case, it can be charged off to profit and loss account.