TREATMENT OF CONSTRUCTION CONTRACT
This query is : Resolved
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
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
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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