Treatment of trasaction

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TR Nagaraja (Querist)

25 May 2009 Hi sir
In the previous year ending 31.03.2008 we had purchased Land 8 lakhs for setting up of business in other state, The same showed in balance sheet under fixed assets as Land. In the current year we made payment to contractor around 7 lakhs for construction of buildings. He given a bill containing, details of materials/labours/expenses--ete towards our payment. My question is What is the treatment of payment towards construction for building under income tax or shall we take it as Expenses, If Expenses which head of expenses we have to show in balance sheet

Ca Anand Dubey

Ca Anand Dubey (Expert)

25 May 2009 You can show the same under "capital work in progress" or " construction-building" till the completion of building.
all the expenses will be capitalised

Vipul J. Bhavsar

Vipul J. Bhavsar (Expert)

25 May 2009 The expenditure on the construction of the Building should be capitalised as the benefit of the asset is going to be taken for more than one year. Accordingly an asset as "Buildings" will appear in the Balance sheet on which you can claim depreciation.

TR Nagaraja

TR Nagaraja (Querist)

25 May 2009 how to capitalise after completing of building.

CA.BHARAT BHUSHAN

CA.BHARAT BHUSHAN (Expert)

25 May 2009 You should just debit the expenses Under the Head "Building under Construction".After completion of building transfer the whole amount in Buiilding and start to claim Depreciation.

CA.BHARAT BHUSHAN

CA.BHARAT BHUSHAN (Expert)

25 May 2009 You should just debit the expenses Under the Head "Building under Construction".After completion of building transfer the whole amount in Building and start to claim Depreciation.

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