Dear All,
I, as a partnership firm, have taken machinery on rent from abroad for 3 years. Machinery is in India and rent has to be paid in Abroad. I need to pay Minimum $ 14,000/- per month as rent amount. I need to pay more if production will be increased in future.
Can I treat it as revenue expenditure or capital expenditure?
My Opinion in ur case
See frnd this case can be like that
A hired a m/c & upto 50% capacity it is $14000 rent. If futher Inc in production than it rent will be increased
In such a case $14000 will be capitalised & excess paid ll be treated as Royalti Paid which shd b debited from P & L A/c.
Here u ll be ignoring proviso of AS 10 i.e. if any exp inc capacity of production or exp due to increased capacity shd b capitalised.. . . . .
The amount paid is in nature of Rent and you are not owner of machinery. No doubt it is a Revenue Expenditure.
| Originally posted by : AMANPREET SINGH | ||
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The amount paid is in nature of Rent and you are not owner of machinery. No doubt it is a Revenue Expenditure. |
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AGREED
CAclubindia
