Kalpesh (Manager Accounts & Finance) (45 Points)
25 June 2011Dear All,
I, as a partnership firm, have taken machinery on rent from abroad for 3 years. Machinery is in India and rent has to be paid in Abroad. I need to pay Minimum $ 14,000/- per month as rent amount. I need to pay more if production will be increased in future.
Can I treat it as revenue expenditure or capital expenditure?
Prakash Mali
(Artical Assistant)
(166 Points)
Replied 25 June 2011
My Opinion in ur case
See frnd this case can be like that
A hired a m/c & upto 50% capacity it is $14000 rent. If futher Inc in production than it rent will be increased
In such a case $14000 will be capitalised & excess paid ll be treated as Royalti Paid which shd b debited from P & L A/c.
Here u ll be ignoring proviso of AS 10 i.e. if any exp inc capacity of production or exp due to increased capacity shd b capitalised.. . . . .
CA AMANPREET SINGH
(Chartered Accountant)
(284 Points)
Replied 25 June 2011
The amount paid is in nature of Rent and you are not owner of machinery. No doubt it is a Revenue Expenditure.
CA ADITYA SHARMA
(CA IN PRACTICE )
(16719 Points)
Replied 25 June 2011
| Originally posted by : AMANPREET SINGH | ||
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The amount paid is in nature of Rent and you are not owner of machinery. No doubt it is a Revenue Expenditure. |
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AGREED
CAclubindia
