As per guidance note on schedule II
4.2.9. “Capital advances” are specifically required to be presented separately under the head “Loans & advances” rather than including elsewhere
As per the Schedule III, capital advances should be included under Longterm loans and advances and hence, cannot be included under capital workin-progress.
Under the Schedule III, Capital Advances are not be classified under Capital Work in Progress, since they are specifically to be disclosed under this para.
Capital advances are advances given for procurement of fixed assets which are non-current assets. Typically, companies do not expect to realize them in cash. Rather, over the period, these get converted into fixed assets which, by nature, are non-current assets. Hence, capital advances should be treated as non-current assets irrespective of when the fixed assets are expected to be
received and should not be classified as Short-Term/Current.