Real estate Development - Treatment under Co Act and IT Act

Dear Friends,

 

One my friend is a real estate developer. He wants to develop a shopping mall in one of the busiest areas in Hyderabad. As per the agreement entered with the Land Owner, he is supposed to give 50% Flats/Shops Building area to the landlord. The Approximate cost of the construction is Rs. 30 Crores. After the construction is over, the developer wants to give the balance 50% of the building to tenants under lease. Every year His revenues will be lease rentals and some advertisement revenue. Now our question is

 

1.       Out of the 30 Crs. Expenditure incurred, he is the owner of Rs. 15 Crs (50% of 30 Crs)  worth property only. So, as per the companies act and Income tax Act he can claim depreciation only on Rs.15 Crores…is it right?..otherwise what is the treatment for it?...

2.       How to treat the balance 15 Crores in the Books..what is the tax treatment and treatment under companies act.?....

 

Kindly give me your advise on this transaction at the earliest.

 

Thanks and Regards,

 

 

CA Shashidhar Raju V

 

shashidharraju @ yahoo.com

shashi.v @ rediffmail.com

Replies (1)

 

know about accounting procedure in real estate industry

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