Rental income on under construction shop
This query is : Resolved
shweta bombe
(Querist)
11 January 2012
ABC Ltd is a construction company. It is having one under construction commercial project on which if 50% of shop value is paid by customer as advance, then rent will be received by the customer till the completion of project.
Q1. so whether these rent paid to customer will be claimed by ABC Ltd i.e. added to the cost of the project?
Q2. From customer point of view rental income will be charged under the head as income from other sources or it will be reduced from the cost of shop?
Please reply.
Urgent.
Q1. so whether these rent paid to customer will be claimed by ABC Ltd i.e. added to the cost of the project?
Q2. From customer point of view rental income will be charged under the head as income from other sources or it will be reduced from the cost of shop?
Please reply.
Urgent.
CA Parth Shah
(Expert)
11 January 2012
Hi Shweta,
In case of Real Estate, the ownership gets transferred on possession. Hence even if the customer pays the half amout, ownership is said to have remained with ABC Ltd only. In this case, Rents paid by company can be added to Cost of Project and from customer point of view, as he is not still the ower of the same property, rentreceived will be Income from Other Sources.
In case of Real Estate, the ownership gets transferred on possession. Hence even if the customer pays the half amout, ownership is said to have remained with ABC Ltd only. In this case, Rents paid by company can be added to Cost of Project and from customer point of view, as he is not still the ower of the same property, rentreceived will be Income from Other Sources.
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