Mat & agriculture income
This query is : Resolved
Rahul Khurana
(Querist)
26 June 2012
Hello Everyone, I have an urgent query for
There is an agricultural land which my father's company sold and has earned profits on that which is exempt under income tax. I have 2 queries :
1) What will be the accounting treatment of that profit? Will it go to Profit & Loss or Will it go to Capital Reserve in Balance Sheet.
2) If it is going to P & L as indirect income , will the liability of MAT be attracted to it? Or is there any clause or notification which exempts it.
Please, Provide the information regarding the same urgently. Highly Thankful.
There is an agricultural land which my father's company sold and has earned profits on that which is exempt under income tax. I have 2 queries :
1) What will be the accounting treatment of that profit? Will it go to Profit & Loss or Will it go to Capital Reserve in Balance Sheet.
2) If it is going to P & L as indirect income , will the liability of MAT be attracted to it? Or is there any clause or notification which exempts it.
Please, Provide the information regarding the same urgently. Highly Thankful.
Soumitra Basu
(Expert)
27 June 2012
According to accounting concept Profit on sale of asset should go directly to capital reserve. It may not be passed through Profit and Loss Account. No MAT will be attracted.
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