Building received as gift from related person

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Priyanshu Goel (Querist)
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14 September 2019 I have received building from related person covered under income tax worth Rs 5L and paid the stamp duty for the gift deed & has duly registered the deed.
Now my question is
Whether i can book the whole value of gift in my books of account? If yes provide the basis to show in the audit?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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15 September 2019 Yes, show gift deed to audit.

Priyanshu Goel

Priyanshu Goel (Querist)
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16 September 2019 Thank you very much sir
My auditor is not ready to support and i need some more details to convince him to disclose the gifted amount

He says that if i will disclose the gifted land in the fixed asset we need to increase capital by Rs 5lacs and there may be possibility for the Assessing Income tax officer to ask for the tax on the increased capital
Whether we can capitalise the stamp duty paid on gifted building approx 30000/- (500000/- + 30000/- = 5,30,000/-) ?
And whether depreciation shall be charged to this gifted property

Priyanshu Goel

Priyanshu Goel (Querist)
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16 September 2019 Auditor says Sec 43(2) of income tax doesn't allow this
What to do?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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16 September 2019 No possibility for the Assessing Income tax officer to ask for the tax on the increased capital due to gift from relative.
You can capitalise stamp duty paid. Yes depreciation can be charged.
Change the auditor who knows the provisions.

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Priyanshu Goel

Priyanshu Goel (Querist)
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16 September 2019 How much amount we record in our books, (cost to previous owner + stamp duty paid) or (value as per stamp deed + stamp duty paid) ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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16 September 2019 Cost to previous owner + stamp duty paid

Priyanshu Goel

Priyanshu Goel (Querist)
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16 September 2019 actually the person who gave the gift has recd it as per will and accordingly that person too has recd the title as per will and original owner of that property has purchased the land on 1960 for Rs. 6000/- and constructed the building thereon. how much we capitalise ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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16 September 2019 Capitalise to the cost it costed to the original owner.

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Priyanshu Goel

Priyanshu Goel (Querist)
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16 September 2019 Is there any way, we can capitalise the gifted asset according to the gift deed (Rs. 5lacs) and increase the capital by Rs. 5lacs

Priyanshu Goel

Priyanshu Goel (Querist)
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16 September 2019 Whether we can revalue gifted asset

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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18 September 2019 Yes you can capitalise as per gift deed value no problem.

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Priyanshu Goel

Priyanshu Goel (Querist)
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18 September 2019 Incase, we received tge letter from the income tax department, what should be our reply to them

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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18 September 2019 Show gift deed no questions will be raised.

Priyanshu Goel

Priyanshu Goel (Querist)
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18 September 2019 K thank you very much sir

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