Fa conversion to investment
This query is : Resolved
CA Ritesh Garg
(Querist)
20 August 2011
Hi all
I wish to know whether a Fixed assets "say building used by the company in the previous years" be converted in to invetments in the books of accounts. As the business of assesee is ceased and there is no such activity in the business. Also the said building is given by the Company to its directors for residential purpose and the perks of the same were also taxed in the hands of the directors every year. We are claiming depreciation on the said building both in the Co Act and I tax Act.
Now i want to know whether the Company could convert this FA into investment, if yes, then what are the implications both under I tax & Co Act and, if not, then why not.
If not, atleast can we stop charging depreciation on the said building under both the acts.
Please support your answer.
Regards
Ritesh Garg
I wish to know whether a Fixed assets "say building used by the company in the previous years" be converted in to invetments in the books of accounts. As the business of assesee is ceased and there is no such activity in the business. Also the said building is given by the Company to its directors for residential purpose and the perks of the same were also taxed in the hands of the directors every year. We are claiming depreciation on the said building both in the Co Act and I tax Act.
Now i want to know whether the Company could convert this FA into investment, if yes, then what are the implications both under I tax & Co Act and, if not, then why not.
If not, atleast can we stop charging depreciation on the said building under both the acts.
Please support your answer.
Regards
Ritesh Garg
CA Pushpendra Gaur
(Expert)
27 September 2011
For converting them as Investment properties they msut not be used by the company in any manner for it's use
Refer AS 13 definition of Investment property.
Refer AS 13 definition of Investment property.
CA Pushpendra Gaur
(Expert)
27 September 2011
Since the property is given to Directors, it been taken for the use of the compnay
CA Pushpendra Gaur
(Expert)
27 September 2011
Also for classifying As Investment property, the property must fetch rent or other income, else it is not an Investment property.
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