Capitalisation of farm expenses - urgent

This query is : Resolved

Max Payne (Querist)
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29 June 2009 Dear all,

Whether the expenses incurred in a farm for purchasing 800 banana plants for total of Rs.30400 can be capitalised or to be expensed? The activity is sale of agricultural produce. no other farm activities.
I am asking because i think this is outside the scope of AS-10 as it is a natural regenerative resource.
What will be implication for tax purpose/depreciation.

Balakrishnan

Balakrishnan (Expert)
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30 June 2009 Since the fruits are eventually to be sold and credited to revenue the planting is naturally expenses to be taken to Profit and Loss account only. If Year end intervenes the standing crop should be judiciously valued and taken as closing stock value for P&L purposes