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Income Tax Query

Naina (CA Student) (477 Points)

02 March 2009

Is there any limit in Income tax Act that suggest that the expenditure on construction of land and building in a particular area cannot exceed a specific amount?

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6 Replies

CA Sakshi (CA Practice) (309 Points)
Replied 02 March 2009

No there's no such limit. But you should invest money for which source is legally definable, otherwise scrutiny may occur.

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CA CS Akashdeep Singh (Practicing CA) (1394 Points)
Replied 02 March 2009

Originally posted by :Naina
"	Is there any limit in Income tax Act that suggest that the expenditure on construction of land and building in a particular area cannot exceed a specific amount?	"

as per IT act, ther is no such type of requirment

Sorabh Gupta (Manager ( Taxation )) (877 Points)
Replied 03 March 2009

Hi Naina

Income tax Act does not specify the limit of amount of expenditure but it only specify the procedure that "How to tax the income"

So income tax act does not specify the limit of expenditure on construction of Land & building.

Its only internal mgmt. policy & depends on budgeted Capex expenditure.

Naina (CA Student) (477 Points)
Replied 03 March 2009

I heard my CA asking to some client to lower the land and building value, which is being constructed. Otherwise his case may be taken up by the IT Deptt.

Sorabh Gupta (Manager ( Taxation )) (877 Points)
Replied 04 March 2009

Dear Uday

I am alos not talking about the language written in act. I m just talking aboout the interpretation of Act.

And naina as u said that "I heard my CA asking to some client to lower the land and building value, which is being constructed. Otherwise his case may be taken up by the IT Deptt."

I think it i the matter of financing of loan for construction might be possible . ????

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chetan (Student) (322 Points)
Replied 04 March 2009

If the building is valued @ actual expenditure incurred and the expenses are incurred with funds from appropriate sources ( not black money) there should be no problem in showing the building @ actual value even if it is very high...