Govtgrant rcvd directly by some other person

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RAGHAVENDRA HEGDE (Querist)
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28 December 2013 My client is a charitable Trust registered U/S12A of IT Act.The Trust Granted MLC Grant of Rs 10 lakh for Building costing Rs 40 lakh.The said work of construction was given to a cotractor.The Govt Dept paid Rs10 lakh Grant directly to the Contractor & the balance amount of the bill paid by the Trust.

Please suggest me in Accounting treatment of this Grant according to AS 12& for the purpose of 12A of the IT Act

CA Hardik Bunha

CA Hardik Bunha (Expert)
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28 December 2013 you have to create grant received a/c in your books of account.

pass following entry:

grant received a/c dr.
to fixed asset

contractor dr.
to grant reeived a/c

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RAGHAVENDRA HEGDE

RAGHAVENDRA HEGDE (Querist)
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30 December 2013 Thank you.
Is there any guidance notes or need to follow AS 12 by increasing bldg value & subsequently reducing bldg value,with some supporting s if any please.

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