EXPENSES TRANSFERRED TO WIP
shweta
(Querist) 19 January 2010
This query is : Resolved
The object clause of the company is investing nature. Company has invested in the fixed deposits. It has earned interest on FD. Company has adjusted the interest income against administrative expenses. In the block assessment, it has disallowed the expenses from A Y 2002-03 to 2008-09. The company has purchased land for the purpose of the construction. Since in the object clause no changes done, interest is charged to income. Now, in the financial year if the object clause is changed as construction, can the expenses disallowed can be transferred to WIP? As the project has not been started.
PLZ REPLY ITS URGENT
Vineet
(Expert) 19 January 2010
Few facts missing!!
1. When was the land purchased.
2. Nature of land as shon in balance sheet is it investment, fixed asset or WIP.
3. Date of change of object clause.
If all along this period the land has been disclosed as investment and object of company was investment, past expenses cannot be capitalised towards WIP of a project which was neither intended nor in existence.
soumitra basu
(Expert) 19 January 2010
No. Neither the company cannot transfer the disalloweed interest to WIP. It shall be treated as Income from other source.
