Depreciation

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Rajpreet Singh (Querist)
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27 May 2009 Dear Sir,
What is the accounting treatment of Plants & trees purchased from a nursery to be sowed along the boundary of a manufacturing unit. What is the treatment of this expenditure captial or revenue & under what head of accounts it is to be accounted for. Purchase is made for a new manufacturing unit and expenditure is substantial. Production of this unit has not yet been commenced so definately this is a capital expenditure. What is the rate of depreciation under Income Tax Act, 1961 under which block. Please advice
Thanks
CA Rajpreet Singh
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CA Nitin Wadhwani

CA Nitin Wadhwani (Expert)
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28 May 2009 Since purchasing of plants does make any asset come into existence, it will be treated as revenue expenditure.

Amount is not the criteria for determining whether the expenditure is revenue or capital.

You name the account as per your wish possibly just as Plant purchased A/c.