Query on a.s. - 16

This query is : Resolved

NEERAJ KHURANA (Querist)
Follow

10 March 2013 I would like to know that:
We have taken a loan to construct a building for business. It gets completed in 11 months. Since it is not a qualifying asset, where do we show the interest on loan for the 11 months period?

Thanks

Neeraj Khurana

CA Suraj Lakhotia

CA Suraj Lakhotia (Expert)
Follow

10 March 2013 If it is not a qualifying asset, you charge interest to profit and loss account.

NEERAJ KHURANA

NEERAJ KHURANA (Querist)
Follow

10 March 2013 Thanks for attending the query but someone has told me that there are some guidelines of C.A. institute on A.S. 16 under which building has been excluded from A.S. 16. So whatever may be the period of construction of a building, the interest on loan shall be capitalised.

Is it true?

Thanks

CA Suraj Lakhotia

CA Suraj Lakhotia (Expert)
Follow

11 March 2013 A qualifying asset is an asset that necessarily takes a substantial
period of time to get ready for its intended use or sale.

I have not yet come across any guideline where building has been excluded.