Overhaul expenses of second hand machinery purchased are revenue expenses ....?
4 Replies
Ankit Hinduja
(Student)
(1227 Points)
Replied 21 February 2012
They r to be capitalized and not revenue expense because these expenses will increase the efficiency of the car..
If the question states that the efficiency of the car does not increase then such expenses can be treated as revenue..
Aman Mehta
(CA Qualified CMA Final and CS Executive)
(63 Points)
Replied 26 February 2012
If that expenses are incurred right at the time of purchase, it is capital expenditure. However, if it is normal repairs it is revenue, otherwise not. As everybody know there is no clear line between these two but still one should be able to justify this in front of AO.
Reshu Singh
(2 Points)
Replied 02 November 2019
No.this is capital expenditure because this is the expense to put the second hand machinery in working condition to gain long term benifit.
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