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Accounting treatment of construction of building when the land is not ours

Nitin Bharadwaj (tax consultant ) (132 Points)

27 October 2016

Dear Expert, My client have an office in bangalore on first floor of his father-in-laws house. The expenses to construct the office is borne by my client where as the building is owned by his father- in-law. how treat this expenses in our accounts. Pls help me. Thanks in advance.

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4 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160327 Points)
Replied 29 October 2016

What are the terms based on which father in law has given permision to use first floor, specifically time period?

Nitin Bharadwaj (tax consultant ) (132 Points)
Replied 30 October 2016

thank you reply sir,

its say about 15-20 years.

thanks in advance for the reply.

happy dewali

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160327 Points)
Replied 30 October 2016

Please note that : "A perusal of section 27(iiib) and 269UA(1) leave no room for any doubt where the period of lease is more than 12 years the lessee is deemed to be the owner of the property for the purpose of assessment under the provisions of the I-T Act."

Thus you may capitallize the expenditures under fixed assets.