Depreciation in case of construction business

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

12 June 2014 My client has Developing Business of Buildings treated as stock-in-trade.Buildings are manufactured in 3 years. all the expenses relating to construction is debited to Construction work in progress. now after three years Construction work-in-progress is debited in Profit & loss account against sale of flats/building.
My question is can we debit the depreciation as per Companies Act to Construction work-in progress account? or we have to claim depreciation as per IT Act Every Year?
Please Advise.

Nikhil Kaushik

Nikhil Kaushik (Expert)

13 June 2014 deperciation is not to be charged on stock-in-trade

Querist : Anonymous

Querist : Anonymous (Querist)

13 June 2014 I know depreciation is not charged on Stock. But i m asking about the depreciation on fixed assets like (EXCAVATORS) which is used in the construction of building. Can we debit the depreciation on excacvators to constructiom work in progress account? and what is the treatment of this depreciation in IT Act

Nikhil Kaushik

Nikhil Kaushik (Expert)

13 June 2014 there is no capital work in progress in your case...it is WIP only.

the depreciation on tools used like excavators can be charged to profit and Loss A/c every year. same shall be the tax treatment also

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