Consideration of Gifted Property Value in Balance Sheet

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Manjunatha Papanna

26 Points Joined December 2015

Sir, Request your suggestion on the following:

A Credit Society receives a Immovable Property in the form of Gift-Deed from it's member. Society gets the property registered in it's name by paying full market value stamp-duty, registration, etc... The property was declared in the assets heads of Balance Sheet with value of Rs.39L. (Society did not pay any amount for the Gifted Property)

To balance the Rs.39L shows in the assets section, Rs.29L was shows as addition to reserve fund and balance amount of Rs.10L shown as payment of Income-Tax as per the Income-Tax act.

How correct is this declaration in the BS. Is it as per Audit Recommended practice? How does this reflect in the IT filing.

Thanks Much. Gopalaiah

Replies (2)

yasaswi gomes

My grammar is 💯 good I

7296 Points Joined March 2019

The society member is already a creditor in the books and it is rightful to credit his account like you did. But you have forgotten that it is a gift and if he is given the credit, the company still owes him that property as due as per the balancing equation. There is another dual aspect entry which can be followed here to set things right.

Donation Asset a/c 39

Tax expense a/c 10

To Donation Received a/c 39

To tax payable a/c 10