Capitalization of expenditure and allowability thereof

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Akshay Malpani (Querist)
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24 May 2011 Our client is a company mainly based in Israel. But now they have incorporated a company in India. They have purchased one office in India. Employees of Israel based company will do interior work of that office. Salry is paid by Israel based company. So my question is, whether expenses incurred for those employees of Israel based company, such as rent, meal etc. will be allowed as expenditure?? Or do we need to capitalize the same to cost of Office.??

U S Sharma

U S Sharma (Expert)
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24 May 2011 all depends on the principal company accounting policy, as the personals engaged are not indians, so they have no burden to pay in india even, their salaries / perks may get paid in israeal.

if the company has transfered funds for such purpose in india, then they can show these as expenses or capitalize, it does not matter a big as there is no PGBP to allow such expenses.

Akshay Malpani

Akshay Malpani (Querist)
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24 May 2011 Mr. Sharma thank you for your prompt reply but i would like to clarify that I am asking this from the point of view of Indian Company which is incurring exp. on those foreign nationals. Will those expenses be allowed ???

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