Tax- capial or revenue

Tax queries 694 views 6 replies

Govt, closed operations. After a few years, court allowed to restart on some conditions. Is the cost of carrying such conditions- capital or revenue?

 

Thanks..pls provide case laws also

Replies (6)

I think it is revenue since it is a usual happening in business. I am also not perfectly sure about this.....

It depends on nature of business of the organisation, if such thing happens freqently then revenue, but if it happends regularly then what is the need for yoiu to ask Qn, you would have reffered to previous happenings

 

If it is a newly established company then it becomes a matter of deciding it the company may think that it will jhappen  in normal course of business then revenue orelse capital

See it all about how the management think it should be 

Well, since you said that the govt closed operations before, i am presuming that it was a running business.

If the business was close for a few years i.e. to say more than a year and the management expects that such type of thing may not happen again in the course of the business, it will be treated as capital or otherwise.

pls furnish full particulars of your case............

 A company was doing a certain business, Government shut it down for several reasons.

The Supreme court allowed the business to continue on some conditions.

How do we treat the costs of implementing such conditions?

 

 

Actually looking for case laws if possible...

thanks a lot.

IF  the court orders the company to close down the operations fully and then to start the business, the company may take it as capital if they truly beleave that it might not happen again in future. as i already said it become part of decition of the management, if you are in the position it dependts on how you look the situationand how you deal 

If  I was in that situation I will try to  capitalise it if the situation will not arise again 

I think in your given case it might not arise

 


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