Himansu Sekhar Pati (CA Final) (208 Points)
26 August 2011Our Clients are selling lands through Power of Attorney.
So How should I treat those Transactions?
Can I Treat these as Sale.
Another thing the Deed Value and the Consideration is lot more different.
Should I show the original or only the Deed Value?
Siddarth R Sunder Ram
(Finance Professional)
(230 Points)
Replied 27 August 2011
Selling through Power of attorney is fine, provided all the transactions including sale, giving power of attorney are all within the memorandum and articles of association and duly approved by the Board. You can recognise revenue only if the sale deed has been executed. A mere Agreement to Sell would not suffice. Look at recoverability of the consideration.
Not much clarity regarding the difference between deed value and consideration. If the agreement says, the party has agreed to sell the land @ 1,00,00,000 (for example) and the payments add up only to90,00,000, you will have to enquire about the balance10,00,000. If the same is recoverable, then you can recognise 1,00,00,000 and show the balance 10,00,000 as receivable. Otherwise, only 90,00,000 has to be recognised.
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