Please Help: About treatement of asset cost of which is upto Rs 5000.00
Posted Date : 23-Aug-2011 , 01:26:12 pm | Posted By:
Category :
Income Tax | Answers :
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Comments :
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If there is any asset cost of which is upto Rs 5000.00 it can be treated as Revenue expense or it should be capitalised.And the limit of Rs 5000.00 is for the particular category of asset..??? |
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Answers:
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 Answer by: CA. Sachin Data |
| I agree with Mr. Ashish....
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| Answer by: Ketan Samdani |
| Agree with experts comments.
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| Comments |
| Posted By : Ashish Karundia |
23-Aug-2011, 05:37:49 |
| No Vipin ji,
As per my understanding (i.e. as i have seen during the audits I have done during my tenure with Big 4/ training) and as per the industry practice, the assets costing upto Rs. 5,000 are directly expensed off. |
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| Posted By : CA VIPIN GARG |
23-Aug-2011, 02:23:32 |
| Very rightly said by Ashish Ji, but one thing i want to correct as per my knowledge is that it should not be called revenue expenditure because for the assets costing upto Rs. 5000 and does not constitute the 10% of total plant and machinery too, we have to first capitalise the asset and then we can claim the 100% depreciation on that.
So although we can claim 100% depreciation on the above assets but first we have to capitalise the same and they will remain as capital expenditure.
Isn't it Ashish Ji ?????? |
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| Posted By : |
23-Aug-2011, 02:23:07 |
| thanx |
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| Posted By : Ashish Karundia |
23-Aug-2011, 02:18:11 |
| Note 8 to Schedule XIV of the Companies Act, 1956
Notwithstanding anything mentioned in this Schedule, depreciation on assets, whose actual cost does not exceed five thousand rupees, shall be provided depreciation at the rate of hundred per cent.
Provided that where the aggregate actual cost of individual items of plant and machinery costing Rs. 5,000 or less constitutes more than 10 per cent of the total actual cost of plant and machinery, rates of depreciation applicable to such items shall be the rates as specified in Item II of the Schedule
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| Posted By : Ashish Karundia |
23-Aug-2011, 02:17:32 |
| Dear Arjun,
The same has to be treated as revenue expenditure. However, there is an exception to the same as provided in proviso to Note 8 of Schedule XIV. |
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