Capitalisation of Expenses

CA Sanjay Baheti (PROPRIETOR) (1155 Points)

21 June 2011  

In case of Private Ltd.Co.which was establised in 2004 & thereafter no business activities was carried out till 2010.then co.has decided to set up a Manufacturing Plant from April,2010 & onwards.

During F.Y.2010-11 the Company incurred/expended the following expenses in relation to new plant set up as under

i) Rs. 36000/-paid to Pollution Board for taking Air & water Consent in realtion to Plant & Machinery which is under installation Stage.

ii) The company has applied for TL/CC limit to SBBJ for which the Bank charged from Co.Rs.120750/-towards Upfront fees for TL sanction & disbursement,Rs20000/- towards EM charges in relation to Equitable Mortgage of Land & Buildings, Rs. 90000/-towards processing charges on CC limit& Rs. 3200/- towards Stamping cost.

iii) Rs. 28250/- paid to Civil Engineer towards fees for Valuation of Land & Buildings to be mortgaged with SBBJ.


iv) Rs.48329/- related tp Interest on SBBJ Term loan Account for the Month of March,2011.

Please let me know the correct treatment of said expenses in relation to New project set up.