Party given advance for building now tax liability

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VIKAS KUMAR SHARMA (Querist)
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23 October 2021 a party make an rent agreement in august 2019 for a building (semi -finished) and given advance to complete work, and agreed to adjust 50% of advance every month rent and pay 50% only. But to due to COVID not able to pay any penny. Now advance will be adjust in the form of rent till February 2021
Now query raises, what will be tax liability of my client for AY 2021-22 if advance not shown in ITR of AY 2020-21? The party has not start production in said premises nor paid.
Please show appropriate way to file ITR and deposit liability.
Regards
Vikas

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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26 October 2021 Please elaborate your query?
Is your party tenant?
Is he working under half finished structure?
When he will finish the remaining part of the building?

VIKAS KUMAR SHARMA

VIKAS KUMAR SHARMA (Querist)
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26 October 2021 Sir,
my party is landlord
construction is completed around 1 year ago

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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27 October 2021 Your party (landlord) paid some advance to complete the construction work. The work got completed by tenant. The remaining amount of payment gets adjusted to the rent. So treat the remaining amount as cost of improvement, and offer the rent amount to tax.

VIKAS KUMAR SHARMA

VIKAS KUMAR SHARMA (Querist)
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29 October 2021 Sir,
my query was how to calculate amount of rent? rent was not paid; aug 2019 advance received from tenant was adjusted as rent till date.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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30 October 2021 Calculate total rent liability till march 2021, as per agreed terms.
Adjust the amount of advance payment received against the rent.
Credit the rent payable by party till march, if any.
Balance amount adjust against unrealized rent.

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