Allowbility of One Time Lease Money paid by builder

Ca. Kirti Kumar Acharya (Self Employed (CA)) (80 Points)

09 October 2008  

Hi all,

One of my Builder client deposited Lease Money to the Local Authority in 2005-06 which is of ONE TIME nature and claimed the same as his expenditure in PL Account.  Before depositing he received notices from the Local Authority.  He received completion certificate after paying the entire ONE TIME lease money for all Flats and Shops constructed and sold.

Before payment, he received Lease Money from some of Flat Buyers which he credited to Lease Money Account.  Most of the buyers did not pay Lease Money till date and transaction is over.  The normal practice for Builders is that they deposit the Money and then collect from the buyers.

Now whether this Lease Money can be claimed as expenditure for 2005-06.  Your kind resolution with case laws will be highly appreciated.

Thanks in advance.