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TREATMENT OF CONSTRUCTION CONTRACT

This query is : Resolved 
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(Querist)
19 April 2010 DEAR SIR
I HAVE ONE PARTNERSHIP FIRM WHO HAS BEEN DOING BUSINESS OF CONSTRUCTION BY PURCHASING LAND .
NOW DURING YEAR ENDING 31-03-2010 THE PARTY HAS COMPLETED CONSTRUCTION UPTO 50 %
AND BOOKING FROM MEMBERS IS RECEIVED FOR 10 FLATS.RECEIVED 20 % ADVANCE FOR THIS ADVANCE BOOKING

TOTAL PROJECT COST IS 1 CRORES AND SALE TOTAL REALISATION WILL BE 1.50 LAKHS.

CAN I TAKE THE 25 LAKHS @50% OF PROFIT IN WORK-IN PROGRESS AND PAY THE ADVANCE TAX

DIXESH
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CMA Ramesh Krishnan

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CMA Ramesh Krishnan (Expert)
19 April 2010 My view ,This is not Construction contract,it is real estate devolpers. Construction is only coming the Owner of the land and the contractor relationship.but your case the property title not transfer to the buyer untill the construction completed.so my opinion you need to recognise only WIP or please go through the Guidance note on Recognition of Revenue by Real estate devolpers issued by ICAI
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