Regarding Added property in business valued by IT valuer

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A client wants to add a hotel to their restaurant business as a new fixed asset, using a valuation report. The discussion clarifies that if purchased by the business, it should be capitalised at cost. If transferred from personal assets, it can be recorded at original cost or fair market value, provided proper documentation exists. A key concern raised is whether this transfer attracts capital gains tax for the proprietor, especially since the PAN remains the same.

Jaswinder singh

Jaswinder singh (Querist)
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24 September 2025 Respected Colleagues,
One of my client running Restaurant and building of restaurant already shown in fixed assets, now proprietor wants to add another property (hotel) in business through valuation dated 17.02.2025 from Certified IT valuer and creates a new fixed asset in business to claim depreciation, now my question, Is proprietor follows correct way to capitalised the hotel in books through valuation is the correct way or some other way ?....kindly guide

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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24 September 2025 If the hotel is purchased by the business, capitalize it at actual cost (purchase price + incidentals).

If it is introduced from the proprietor’s personal assets, record it at either the original cost to the proprietor or current fair market value as per current circle rate (supported by a certified valuer report), as mutually agreed and reliably measurable, but only if supported with proper documentation and transfer into business.

Jaswinder singh

Jaswinder singh (Querist)
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24 September 2025 ok thanku sir for your valuable feedback,
but the doubt is that, whether personal property transfer to business attracts capital gains IN CASE OF PROPRIETOR, because the PAN is same and property will also in the name of proprietor after transfer....Please guide

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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24 September 2025 As per income tax act when any property is added to business (stock in trade) the capital gain is evaluated and is levied in the year of its sell. But because here it is used as fixed asset so the gain will be charges in the year of its transfer.

Jaswinder singh

Jaswinder singh (Querist)
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24 September 2025 Ok sir well explained
Thanku you so much

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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24 September 2025 You are welcome.

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