Lease land - Building constructed

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dinesh

student

32 Points Posted on 19 June 2008

Hai Friends,

I have a question. "A" leased his land to "B" for 28 years with an agreement that "B" can use the land for any purpose but should return it back as an empty land. Accordingly, B constructed a building and has let it out for rent. So , as per agreement, he has to demolish his building before giving it to A. My question is that How B has to treat it as per Accounts and Income tax?. How he can make a provision for that Capital loss which would occur after 28 years and What is Income tax Act contention to this case?

Replies (2)

hemanth

Articles & Final Student

48 Points Posted on 19 June 2008

The Income tax act recognises the income from house property and You can show the building value in the accounts by showing building constructed on lease land. The second question answer ( for capital loss) is while claiming deprecitaion it is to be calculated by adding domlish expenses to the building which going to incur after 28 years, to the building value and deduct from it any salvages after 28 years from that building should be divid by the life of building.

dinesh

student

32 Points Posted on 20 June 2008

I also need to know whether any expenditure can be claimed under the IT Act for such capital loss that is most likely to occur in the future. What benefit does the Act give him in such a scenerio?