Para 3.16.26 — MSO (Audit)
Original Rule Text
3.16.26 Capital receipts in so far as they relate to expenditure previously debited to capital in the course of construction of a project should be utilised in reduction of expenditure. Thereafter their treatment in the accounts may depend on circumstances. However, except in the case of recovered stores of Railways and the Posts and Telecommunications department, or as otherwise provided in the rules of allocation applicable to a particular department, they should never be credited to the ordinary revenue account of the undertaking.
What This Means
Capital receipts related to construction-phase expenditure that was already debited to capital should be used to reduce that capital expenditure. After construction is complete, the treatment of further capital receipts depends on circumstances. However, with specific exceptions for Railways and Posts & Telecommunications recovered stores, capital receipts must never be credited to the ordinary revenue account of the undertaking.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Capital receipts during construction reduce the capital expenditure already booked
- 2Post-construction capital receipts are treated based on specific circumstances
- 3Capital receipts must never be credited to the ordinary revenue account
- 4Exceptions exist for recovered stores of Railways and Posts & Telecommunications
Practical Example
During construction of a government dam, surplus construction materials worth Rs 2 crore are sold. Since the original purchase was debited to capital, the Rs 2 crore sale proceeds are credited in reduction of the capital expenditure rather than being shown as revenue income of the irrigation department.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
Why can't capital receipts be credited to the revenue account?▼
What is the exception for Railways regarding recovered stores?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.