co. paid huge sum to demolish building. new one be contructed on the same site. can demolition exp. be capitalised with new bal. b\d ?????? i need ans with explnation
nikhil shah
(B.Com)
(28 Points)
Replied 13 October 2012
the expenses can be taken as prio period exp and it can not be capitalised
praveen
(Chartered Accountant)
(6971 Points)
Replied 13 October 2012
Expenses incurred on demolishing the building has to be expended in the year of incurring the expenditure itself. If you want to capitalise you need to answer the question "does demolition lead to formation of a new asset or improve the utility of the asset" the answer being no you have to expend it .
CMA RAVI
(ASSISTANT MANGER - FINANCE)
(478 Points)
Replied 14 October 2012
CA Lokesh Pokharna
(CA (Ahmedabad Bhilwara Chittorgarh))
(4128 Points)
Replied 15 October 2012
demolisition exp. should be captilised along with new construction cost.
reason/logic is that without demolisition new construction is not possible hence this activity is part of new construction activity....
under income tax dep. allowable.
On this issue a case law also available in income tax act.
yusufsahibmaricar
(Office Manager Cum Accountant)
(40 Points)
Replied 15 October 2012
GSTR 9 and 9C for FY 23-24 as amended by Notification 12/2024 dated 10th July 2024(with recording)
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