Profit on Sale of Land

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

29 December 2010 We had purchased a land for erecting Factory building in FY 2007-08. Out of this land we sold some portion in current FY. The sale prise is more than the purchase prise. How to treat this gain in books? Pl help.

Zeeshan

Zeeshan (Expert)
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30 December 2010 Capital Gain (business Asset-Non depreciable)

Zeeshan

Zeeshan (Expert)
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30 December 2010 In books pass the entry for Profit on sale of fixed Assets.

Bank A/c Dr. 100 (sale price)
To Land account 80 (cost)
to Profit on sale of FA a/c 20 (Profit)

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Querist : Anonymous

Querist : Anonymous (Querist)

30 December 2010 Dear Zeeshan,
Thnks for the reply. U r correct. but i have a query about Acquired cost of Land means before to trf profit portion to income we should reevaluate the land cost considering RBI's NAV rate. M I right? Pl reply.
Thnaks

Zeeshan

Zeeshan (Expert)
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30 December 2010 As per my opinion, there is no need of revaluation for accounting purpose nor for IT computation purpose. You can proportionate the total cost of acquisition in the ratio of Area sold and area kept for use.

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