Treatment of upward revaluation of land & building

This query is : Resolved

Guest

Guest (Querist)

20 June 2013 Dear Sir,

Can reserve created out of upward revaluation of land & building can be credited to proprietors' capital account.

Rupesh Jain

Rupesh Jain (Expert)
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20 June 2013 why are you makeing revaluation of land & building in prop. firm

it is only for company

if you are making''
above entry is correct

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Guest

Guest (Querist)

20 June 2013 Sir,
You mean to say that we can not revalue land & building in case of proprietorship firm.

Rupesh Jain

Rupesh Jain (Expert)
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20 June 2013 yes you can not do this in prop/partner ship firm
and what is logic for this i can not under stand

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Guest

Guest (Querist)

20 June 2013 Sir,
Where it is written that we cannot make upward valuation in case of proprietorship concern; please suggest.

Actually the case is that the proprietor has withdraw in excess of the capital and thereby there is negative capital in the books.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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20 June 2013 My view it can be credited, since it is proprietorship business

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Rupesh Jain

Rupesh Jain (Expert)
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22 June 2013 if your case select for income tax securtiny
then
following you to face

1) if you claim Depreciatonon revalued value then ITO disallow the depreciation on upwad value and make tax demand with Intt.

2) if you have CC limit or any loan from
bank ITO make intt additon on DR bal. of capital a/c bal with rate of intt. pay by you to bank.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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22 June 2013 Hi, myview

1. Generally land having appreciation only, there is no problem in case of A.O disallow on depreciation. may be building has the that issue

2.Incase of the actual valuation justified proof with ITO, there will not be any problem ,i fell