Term loan

Application of AS-16

Interest to be capitalised if it is a qualifying asset  date reckoned from project commencement date  ie from ground breaking cermony and upto the date of  commencement of Commercial production

and the interest for the period after commencement of commercial production is revenue in nature and to be expensed 

its a running business. they took the loan and parallely started using asset. no date difference in put to use and ready to use.

Dear Madam

Capitalisation comes for qualifying assets .Qualifying assets are one which takes substantial period of time for completion which is not defined generally presumed 12 months .Normally plant and machinery and buildings will qualify for such capitalisation in the case of running business I am of the view that entire interest is of revenue nature and need to be expensed

Interest will be treated as revenue expenditure since the asset is not a qualifying asset under AS-16.