Ad-Free CAclubindia and Daily Updates on your mobile. Subscribe Now!

Purchase cost of house

Deepak Kumar (Chartered Accoountant) (270 Points)

10 February 2010

I have purchased a house of Rs. 1500000/- & incurred Rs. 20000/- against paint of this house. Can I include this 20000/- in Purchase Cost of Rs. 1500000/-. Pls answer me.

Reply
Follow
Share

7 Replies

Amir (Learner) (4016 Points)
Replied 10 February 2010

Dear Ajay,

Yes it will be capitalized......

Example - First Insurance in case of New Car is capitalized..

First Recharge Coupon in case of mobile is capitalized

1 Like

Upgrade to CAclubindia Pro. Subscribe Now!

saranraj (CA FINAL) (419 Points)
Replied 10 February 2010

Originally posted by : Amir
	Dear Ajay, Yes it will be capitalized...... Example - First Insurance in case of New Car is capitalized.. First Recharge Coupon in case of mobile is capitalized

Mr. Amir Can you explain me under which section it has been said that first recharge coupon in case of mobile have to be capitalized???

Amir (Learner) (4016 Points)
Replied 10 February 2010

Dear Saranraj,

AS-6 defines the Historical Cost i:e the cost on whiich Depreciation is to be charged

Historical cost of a depreciable asset represents its money outlay or its

equivalent in connection with its acquisition, installation and commissioning

as well as for additions to or improvement thereof.

Now, Income Tax uses the term "actual cost", unfortunately the definition of the term itself uses the expression "actual cost", therefore it has to be understood in paralance..........