Land entered in fixed assets by construction company

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

27 May 2015 Sir,
My client is Ltd Construction Company. Earlier years they purchased Land and entered in Fixed Assets. Now, I want to correct the entry by transferring such land in Stock.
Kindly, help me from the point of Accounting Standard, Income Tax and Companies Act what remedies are available.

CA Mohit Bansal

CA Mohit Bansal (Expert)
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27 May 2015 In accounts, its just passing of JV but from the point of view of Income Tax Act,1961 following are the implications:

1)There will be short term or capital gain as per the holding period from the date of acquisition to date of conversion into stock in trade.
2)FMV of the land as on date of conversion would be the sale consideration

Querist : Anonymous

Querist : Anonymous (Querist)

27 May 2015 Is there any remedies available to save such capital gain.

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CA Mohit Bansal

CA Mohit Bansal (Expert)
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27 May 2015 No such remedy available. You can invest the amount in residential house or NHAI/RECCI bonds(max 50L) to avail the exemption