CONTENTS capitalization of Assets FAQ 1 Designs and Engineering Drawings fees/SoftwareFAQ 2 Capital/Life time / Insurance SparesFAQ 3 Standby EquipmentFAQ 4 Dies & Tools and Jigs & FixturesFAQ 5 Overhaul/Refurbishment ExpensesFAQ 6 Liquidated Damages on Capital ContractsFAQ 7 Interest of Deferred Payment Credit on Capital AssetsFAQ 8 Self Fabricated/Constructed AssetsFAQ 9.1 Enabling WorksFAQ 9.2 Structural WorksFAQ 9.3 Distinction between Foundations for Buildingsand Foundations for MachineryFAQ 10 Capitalisation Date of ProjectsFAQ 11 Completion of Commissioning CertificateFAQ 12 Change in Insurance Status on Commissioning:FAQ 13 Completion Certificate-BuildingsFAQ 14 Partial Capitalization and Commissioning of PlantCompleted But not Put to UseFAQ 15 Insurance Related IssuescAQ 16 Determination of Date of Commissioning andAccounting Entries during CWIPFAQ 17 Capitalization of Assets & Foreign ExchangeFluctuation-In Companies Act & Income Tax Act FAQ 1B Set off of Interest Earned during Setting Up ofNew Plant / Expansion Plant against InterestExpense during ConstructionAnnexuresA: Delivery Note of Goods for Installation/ErectionB: Format of capitalization ReportC: Inter-office MemoD: Format of Assets capitalization Details1: capitalized cost of SP Machine2: Foreign Currency Loan-Yearly Installments Remitted3: Foreign Currency Loan and its Realignmentfor Exchange Rate Variations4: Machine Cost & Depreciation for Balance Sheet Purposes5: Machine cost & Depreciation for Income Tax PurposesAccounting StandardsAccounting Standard (AS) 10 ……………….. v ……… · Accounting Standard (AS) 16 (issued 2000)Accounting Standard (AS) 11* (revised 2003)Text of JudgmentsJ-1 CIT Vs Karnataka Power Corporation 247 ITR 26B (SC)J-2 CIT Vs Delhi Airport Service 255 ITR 91(Del)J-3 Gujco carriers Vs. CIT 256 ITR 50 (Guj)J-4 CIT Vs Engine Valves Ltd., 126 ITR 347 [Mad]J-5 Hanuman Motor Service Vs CIT 66 ITR BB (Mys)J-6 C. R. Corera & Bros Vs CIT 49 ITR 1BB (Mad)J-7 New 5horrock Spinning and Mfg Co. Ltd., vCIT 30 ITR 33B (Bom)J-B C.I.T. v. Co-Operative Sugars Ltd., 235 ITR343 (Ker)J -9 CIT v. Mahalakshmi Textile Mills Ltd., 66 ITR 710 J-10 Alembic Chemical Works Co. Ltd., v. C IT-17rITR 377 (SC)J-11 Dehri Rohtas Light Railway Co. Ltd. v. c.1.T. 46ITR 533 (Pat)J-12 C.I.Tv. Himalaya Drug Co. (P.) Ltd., 234 ITR167 (All)J-13 c.1.T. v. Porrits and Spencer (A) Ltd. 257 ITR 49(P&H)J-14 CITVs Bokaro Steels Ltd., 236 ITR315 (SC)J-15 CIT Vs Kamal Co-operative Sugar Mills Ltd., 243ITR 2 (SC)J-17 Bongaigaon Refinery & Petrochemicals Ltd., vsCIT 251 ITR 329J-lB Indian Oil Power Consortium Ltd., Vs ITO 315ITR 255 [Del]J-19 CIT Vs SASAN POWER LTD- 205 Taxman 56(Mag) (Del)J-20 Tuticorin Alkali Chemicals and Fertilizers Ltd. v .CIT 227 ITR 172(SC)J-21 Sutlej Cotton Mills Ltd. v. C IT -116- ITR -1 [SC]J-22 CIT v. Tata Locomotive and Engi~eering CoLtd. 60- ITR-405 [SC]J-23 CIT Vs canara Bank Ltd., (63 ITR 32B) [SC]J-24 Triveni Engineering Works Ltd., Vs CIT -156ITR 202 [DEL]J-25 CIT Vs Woodward Governor India P. Ltd.,312 ITR 254 (SC)J-26 6-0il & Natural Gas Corp. Ltd., Vs CIT 322 ITR1BO(SC)J-27 7-CIT Vs Arvind Mills Ltd., 193 ITR 255About The Author CA P .N. Shasrty has qualified in the year 1975 -and also did CompanySecretaries course simultaneously.He worked as a Company Secretary from 1975 to 1980 of a publiCcompany in which he handled the Direct and Indirect taxation besidesSecretarial work.He started his own practice as a Chartered Accountant and in theinitial stages was engaged in nursing back I rehabilitating finandally sicksmall and medium industrial units – besides routine audit work.About The BookThis is a guidance note for those who are dealing with thesubject matter such as Chartered Accountants, Engineers,Corporate Lawyers, Auditors, Members of ICWAI,Surveyor & Loss Assessors and Valuers. Also usefulbook for each and every Industrial Unit.