15 December 2009
my client is having HUF, in which he has land worth rs 30lacs. they have also one private ltd. co., in which his son and other family member are shareholder and director. the above said co want to take this land on lease basis to build office and factory building thereon. after termination of lease, what will be the option for building, which build by co. on the HUF land ? is this viable transaction ?
15 December 2009
While making lease deed; authority to construct building should be given to the company.
The lease period covered should be good enough i.e. around 10 years or more. So that one will not be in a position to question the reasonability of the transaction.
After the lease period is over; the possession of land with building will be handed over to HUF.
Lease rent should be fixed according to the prevalent market rate . So that in Income-tax; it will not be questioned.
CAclubindia
