Puchase of Batery

This query is : Resolved

AMIT KUMAR ROY (Querist)
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10 July 2008 Sir,

I have purchased the Batery for Rs.8000, so it is required to book the purchase in the expenditure head or fixed assets head.
Please clarify sir.

Thanks sir.

Sanjeev Kumar Varshney

Sanjeev Kumar Varshney (Expert)
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10 July 2008 Dear Amit

If the Battery is part of any machinery or it is purchased to obtain extra benefit from machine, then it will be capitalised with that particular asset.

jaygulani

jaygulani (Expert)
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10 July 2008 If after purchasing of any fixed assets, any type of expenses incurred to increased their capacity, so this expenses will be capitalized (debit to such fixed asset account). But in your case batery purchased for machinery to operate machine. Through this exps. capacity of machine will not be increased, so this should be revanued. Online account teacher Jay Gulani.

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CA Devanshi Gandhi (Ajani)

CA Devanshi Gandhi (Ajani) (Expert)
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04 April 2009 i agree with the expert it cant be capitalised

taxindiaconnect

taxindiaconnect (Expert)
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27 April 2009 The basic intent of the law is that is the purchase of a capital assets is to replace any part of the exiting fixed assets to work smoothly and effectively, and the purchase of such assets do not enhance the capacity of the existing machine, the new assets can be charged to P & L Account. In Income tax also the same logic applies. However in this query if the cost is since > 5K, the battery needs to be capitalized if this is a separate assets independent of any existing assets.