As per AS-16 or Section 32 of the Income Tax

This query is : Resolved

Rajesh (Querist)
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14 August 2010 Dear Experts,
A firm has purchased a fixed asset which has to be installed and used. In this situation what amount has to be capitalised...whether as per AS-16 ( still the Qualifying Asset is ready to use) or as per Section 32(1) of the Income Tax Act till the asset is put into use. This phrase gains significance when there is more time gap between when the asset is ready use and asset is put to use.
In the above situvation upto what time i have to capitalise the interest amount.
With regards,
Rajesh.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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14 August 2010 My understanding says, for accounting purpose AS 16 has to be followed and for income tax purpose 32(1) of the Income tax Act,1961 may be followed.

VINOD ARORA

VINOD ARORA (Expert)
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14 August 2010 Here you may note that generally the date of ready to use may be considered as date of put to use, as far as capitalisation of interest on qualifying asset is concerned. The date put to use by you is irrelevant and int. paid after date of ready to use should be transferred to P&L A/c.

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