14 October 2009
My question is : our company is in Infrastructure business and presently doing BOT Project i.e. Raod work it will take 2 years to complete the contract and thereafter toll tax will be charged as income for another 10 years. How the income will be determined and what will be the income tax liability. Please expain and refer the concern section of IT act.
1. the whole construction cost will be allowed as revenue expenditure as and when incurred.
2.the toll tax recovered from the 3rd year will be taxable as income. and the loss broght forward will be set off against that income.
Further i have one second opinion:
1.the construction cost will be capitalised as intangible assets and depreciation will be charged on it @ 25% from the previous year in which the project will start earning toll tax ie the project is used for the purpose of business.
Disclaimer: i dont have any practical exposure in this regard, let the query remain open and take opinions of other experts.
CAclubindia
