Stamp duty paid on property-capital or revenue exp?

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  1. Harish Ragav

    Harish Ragav New Member

    Case:XYZ Pvt ltd has came into existence in FY 2010-11. Before that, it was a partnership firm named XYZ Industries. As on 31st March, 2013, Factory Premises Plot No 123 appears in the balance sheet of XYZ Pvt ltd at WDV value Rs. 38,00,000/- It has been depreciated @ 10% for the years since its acquisition. However, on some legal documents perrtaining to the property, name of partnership firm was appearing. Hence the Company passed a deed of assignent in the name of XYZ Pvt Ltd so that name of partnership firm is replaced with name of company. As per the deed, the property was revalued & Stamp Duty Rs. 35,00,000/- was paid on the same on 24th Jan 2014. Query: Whether Stamp Duty payment should be capitalised or treated as expense? If capitalised, then whether to charge depreciation prospectively or retrospectively? Consider implications of Companies' Act & Income Tax Act.

    Thanks in Advance

    VAIBHAV DILIP RANE Active Member

    XYZ Pvt. Ltd., has came in force since FY 2010-11, via conversion, so PC shall consist of wdv of such factory premise on conversion,
    the company will record the value of factory, as in PC, or as in Balance sheet executed by the Firm during conversion, in normal case.

    However, value of factory was not recorded till FY 2012-13,

    Value of Factory = as Valued by Valuer (+) Stamp Duty paid on 24/01/2014.

    Depreciation - Shall come retrospectively, cause the assets was present since company has come in force,... and whatever income generated by the
    company was from the utility of the Factory.

    (above is my personal view, and not statutory)

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