Revenue expenditure or capital expenditure

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

26 April 2013 purchase of plastic crates(used to trade fruits)is a revenue expenditure or capital expenditure?....pls i need an urgent rply....

CA.Sourabh Sethia

CA.Sourabh Sethia (Expert)
Follow

26 April 2013 pls clarify - what is the life span of these crates & how significant the amount of purchase is ??

Querist : Anonymous

Querist : Anonymous (Querist)

26 April 2013 well the life span is abt max. 8 months to 1year and the expnditure is in the range of 20lacs per annum

Upgrade to CAclubindia Pro. Subscribe Now!

CA.Sourabh Sethia

CA.Sourabh Sethia (Expert)
Follow

26 April 2013 since the lifespan is very low it can be considered as Revenue Expenditure

its a Revenue Expenditure

Querist : Anonymous

Querist : Anonymous (Querist)

26 April 2013 thanks for your valuable feed back but is this explanation is sufficient to convince the IT deptt?

CA.Sourabh Sethia

CA.Sourabh Sethia (Expert)
Follow

26 April 2013 All the expenditures which are incurred in the day to day conduct and administration of a business and the effect-of which is completely exhausted within the current accounting year are known as "revenue expenditures". These expenditures are recurring by nature i.e. which are incurred for meeting day today requirements of a business and the effect of these expenditures is always short-lived i.e. the benefit thereof is enjoyed by the business within the current accounting year. These expenditures are also known as "expenses or expired costs."

Message likes : 1 times

Querist : Anonymous

Querist : Anonymous (Querist)

26 April 2013 bt there is some judgements agains it