FIXED ASSET

[SRINIVAS PALAKODETI]

WE HAVE PURCHASED A PAINTING COSATING RS. 400,000/-. HOW AND IN WHICH CATEGORY OF FIXED ASSETS UNDER THE COMPANIES ACT AND INCOME TAX ACT CAN WE CAPITALIZE THE SAME.

Please provide the nature of your companies business. Also please describe the product purchased.

[SRINIVAS PALAKODETI]

We are in Insurance business and product purchased is a painting.

[CA Rachit Agarwal]

If it is used in the office, the same could be capitalized to office building.

Paint is purchased for building renovation and hence it has to be debited to BUILDING account both under Companies Act and Income Tax Act.

AI Summary

Capitalization of fixed asset: office painting used for renovation should be capitalized to Building account under Companies and Income Tax.
If the painting is used in the office or was purchased for building renovation, treat the cost as capital expenditure and debit it to the Building account for both Companies Act and Income Tax Act purposes, classifying it as part of the fixed assets of the building.