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Company engaged in real estate business
Hello Sir,
My assesses has started an private limited company engaged in real estate business. They purchased the big property on name of director and sell it to people small portion on the name of company. On complete payment they done an registry directly from director. Payment done in cash. Director purchased the property from farmer on cash which violates the section 40A(3). Please tell me how I can done the accounting and paid income tax in this case. Company started with 100000 capital.
Replies (1)
This could be an agricultural land since it is purchased from a farmer. But only a farmer can purchase agricultural land from another farmer unless approved by the collector. Director will also have to obtain permission to do plotting over the land. He will do the plotting and sell it as residential plots to people. Has the director obtained the permission to convert the agricultural land into non-agricultural land?
There could be a procedure wherein the rights entry in 7/12 may be transferred from the director to the company name. If that is done, then you may show the land as stock in trade.
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