24 September 2012
If a company taken a Premises( Building ) on operating lease and incurred a huge amount on office renovation and office renovation is completes in 6 months from date of taken Premises on lease.The permises is put to use after 6 months from the date of lease .so my question is we capialise cost of Rent along with Office renovation cost in value of fixed assets. Its Urgent
24 September 2012
Since the premises is taken on OPERATING LEASE, show rennovation cost separately. Under income tax, however, you can claim the full rennovation cost as revenue since premises is not owned by you. Under Accountancy, show it separately, do not club it with COST of RENT.
24 September 2012
Dear Friend, since the premises has been taken on operative lease and hence the right of possession has not been transferred to you at the end of lease period. So it is right to show the all expenditure as current expenditure and claim it through p/l rather capitalized it. Thanks and agreed with Joglekar sir
25 September 2012
sir ,As per Sec 30 of income tax act any heavy repairs done on leased premises by tenants than tenants should capitalise the cost of repairs and claim Depreciation on it.
25 September 2012
you have to take the call. When the expenditure is allowed as REVENUE, you can always claim as CAPITAL. The revenue authorities may not object to that. " Huge amount" seems to be quite significant and material in your case. Please take the call accordingly.
CAclubindia
