property held as stock in trade or as a fixed assets

Others 1166 views 3 replies

sangini

employee

32 Points Posted on 19 August 2010

My que. is

client who has a office and now want to get the knowledge regarding weather he should consider office as a stock or as a fixed assets or as a investments..

what is the defferenceses among them to give different different treatments.?

and he has paid half amount of the office and get the possesion of his office in the building which is under constrcution...so what is the effect of depriciation and how it is treating in above three situation..

Replies (3)

CA HARISH KUMAR

ACA B.Com(Hons.)

80 Points Posted on 19 August 2010

If your client has the business of Real Estate like purchasing the offices and then selling them, only then he can treat that office as Stcok In Trade.

If he is running his business from the office like regd, office or branch then he can treat that as Fixed Asets.

If he has neither business of Real estate nor he is running business from that office then it will be treated as Investment.

Now about depreciation, depreciation will be claimed only in the case when it will be held as fixed asset but only after, it has been put to use. Means when you start your business from there. Rate will be 10%.

As stock in trade or Investment no depreciation will be claimed.

It can be shows as stock in trade or investment any time after you get possession. Under construction does not matter.

sivaram

Asst Mgr-Taxation

6918 Points Posted on 19 August 2010

Originally posted by : CA HARISH KUMAR
	If your client has the business of Real Estate like purchasing the offices and then selling them, only then he can treat that office as Stcok In Trade. If he is running his business from the office like regd, office or branch then he can treat that as Fixed Asets. If he has neither business of Real estate nor he is running business from that office then it will be treated as Investment. Now about depreciation, depreciation will be claimed only in the case when it will be held as fixed asset but only after, it has been put to use. Means when you start your business from there. Rate will be 10%. As stock in trade or Investment no depreciation will be claimed. It can be shows as stock in trade or investment any time after you get possession. Under construction does not matter.