Accounting in case of sale of land

Harshita (CA FINAL STUDENT) (116 Points)

20 August 2012  

SIR,

MY QUERY IS:-

 

A  PRIVATE LIMITED COMPANY IS HAVING A LAND (MORE THAN 5 YEARS, LONG TERM ASSET) IN FIXED ASSETS LAST YEAR..

THIS YEAR, IT DEVIDED LAND IN 70 (UNEQUAL SIZES) PLOTS AND IT EXPENSED ON LAND (LIKE REGISTRY EXPENSES, ROAD CONSTRUCTION, BOUNDARY CONSTRUCTION ETC.).. AND SOLD AROUND 70% OF LAND (IN PLOTS) TO PUBLIC IN VARIOUS TIMES..

COST OF LAND WAS VERY LOW AND SELLING 70% PART WAS VERY HIGH... AND COMPANY STILL HOLDING SOME OF THE PLOTS 30% OF LAND WITH IT..

 

WHAT WILL BE THE ACCOUNTING TREATEMENT, VARIUS OPTIONS FOR MINIMIZING TAXATION (LIKE CONVERSION IN SIT), AND WHAT WILL BE VALUATION OF THE 30% LAND WITH COMPANY AND TAX COMPUTATION OF LAND SOLD... WHAT BENEFITS/EXEMPTIONS INCOME TAX ACT PROVIDES TO SAVE TAXATION ON SUCH PROFITS ARISING DUE TO SALE OF LAND...

 

PLEASE CLARIFY WITH THE BEST ACCOUNTING TREATEMENT AND TAX SAVINGS

 

 

REGARDS