Classification of Advance Paid for Land as ‘Land Inventory’ or ‘Advance’ When Neither Possession Nor Sale Deed Executed
- Blog|News|Account & Audit|
- < 1 minute
- By Taxmann
- |
- Last Updated on 22 December, 2023
Latest from Taxmann
A company engaged in the construction and development of real estate and town planning has acquired a Group Housing Plot for the development of a town from the Development Authority (DA). The company has paid full consideration to the Development Authority (DA) as per the allotment letter and recognised the same as land inventory in that year.
However, the sale deed in respect of the said plot is yet to be executed, and the possession of the plot could not be obtained due to the raising of additional demand for infrastructure charges by the Authority which the Company did not accept. The company requested cancellation and refund of the full consideration amount with interest to the Company.
The Authority has given 2 options: either to execute the conveyance deed after paying the infrastructure surcharge; or withdrawal of the allotment after deducting 10% of land consideration amount. The company has requested the higher authorities to execute of sale deed at the same rate as informed vide allotment letter or to refund the complete consideration amount with interest.
Amidst these developments, the accountant is confused about the classification of the amount of advance and approached the Expert Advisory for their opinion on the classification of land acquisition either as ‘Land Inventory’ or transfer the same to ‘Advance’; or any other suitable treatment is required as per applicable Ind AS.
Click Here To Read The Full Story
Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.
Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.
The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:
- The statutory material is obtained only from the authorized and reliable sources
- All the latest developments in the judicial and legislative fields are covered
- Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
- Every content published by Taxmann is complete, accurate and lucid
- All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
- The golden rules of grammar, style and consistency are thoroughly followed
- Font and size that’s easy to read and remain consistent across all imprint and digital publications are applied
Sign Up
To subscribe to our weekly newsletter please log in/register on Taxmann.com
Latest Books
Everything on Tax and Corporate Laws of India
To subscribe to our weekly newsletter please log in/register on Taxmann.com
CA | CS | CMA
