Monday, August 10, 2009

Depreciation on roads

Our company incurred expenditure of Rs.50 lakh towards laying roads within the factory premises. We wish to claim the expenditure towards laying of roads as revenue expenditure. Is it possible?
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2 comments:

  1. It is not possible to claim the expenditure towards laying of roads within factory premises as revenue expenditure. Building includes roads constructed inside the factory premises and depreciation is allowable on such roads at the rate applicable to building. It cannot be claimed as revenue expenditure. [CIT v. Gwalior Rayon Silk Mfg. Co Ltd (1992) 62 Taxman 471 (SC); Tamilnadu Road Development Co Ltd v. Asstt. CIT (2009) 24 DTR (Chennai)(Trib) 618].

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  2. Inspite of above reason, it can also be said that, the benefit of roads will not expire in the year in which it is incurred i.e. the use of roads usually for more than a year. So, it cannot be claimed as revenue expenditure by logical.

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