Real Estate Business

This query is : Resolved

omnath (Querist)
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20 February 2025 sir
Mr .A RUN A NAME AND STYTLE OF " XXX TEXTILES" BUSINESS. HE PURCHAES VACANT LAND AS ON 05.04.2023 RS.30.00 LAKS AND 50,000 SQ.FT..HE IS BEGIN THE REAL ESATE BUSINESS IN THE NAME OF "RRR REAL ESTATE" ON BEGINE FORM 1.4.2024. HOW THIS LAND TRANSFER FROM XXX TEXTILES TO RRR REAL EATTE ACCOUNTS.
THANKS

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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12 August 2025 Hi! Here’s how Mr. A can handle the transfer of land from “XXX Textiles” to “RRR Real Estate” in his books:

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### Scenario:

* Land purchased under “XXX Textiles” on 05.04.2023 for ₹30 lakhs (vacant land, 50,000 sq. ft.)
* New business “RRR Real Estate” started from 01.04.2024
* Need to transfer land from old business to new business accounts

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### Accounting Treatment:

1. **If Both Businesses are Sole Proprietorships of Mr. A (Same Owner):**

* Treat this as a **business asset transfer between two business segments**.
* Transfer the land’s **book value** (₹30 lakhs) from “XXX Textiles” books to “RRR Real Estate” books as capital introduced in the new business.

**Journal Entry in RRR Real Estate:**

```
Land A/c (RRR Real Estate) Dr. 30,00,000
To Capital Introduced by Proprietor (Mr. A) 30,00,000
```

**In XXX Textiles:**

* Remove land asset from books by transferring it to proprietor’s capital account:

```
Capital Withdrawn by Proprietor (Mr. A) Dr. 30,00,000
To Land A/c (XXX Textiles) 30,00,000
```

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2. **If Both are Different Legal Entities:**

* The transfer is treated as a **sale or capital contribution**.
* Land transfer will be at **market value** or agreed price.
* Proper documentation is needed (sale deed/transfer deed).
* GST implications may arise if applicable.
* Accounting entries will depend on sale price/payment terms.

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### Important:

* Maintain clear records and valuation for audit and tax purposes.
* Consider legal formalities if different entities.
* For GST, if land sale is exempt or taxable, check accordingly.

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If you want, I can help draft the journal entries or guide on GST and legal aspects!

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