Query related to FBT

Hi Manisha,

Only those expenses that form part of the actual cost of a capitalasset eligible for depreciation u/s 32 are not subjected to FBT. Butthe expenditure falling within clauses (A) to (P) of Section 115WB(2), incurred by a builder, which is not being charged to the P & LA/c in keeping with the requirements of the Accounting Standard,will not be exempt from FBT.Consider answer to Q 16 in the FBT circular of the CBDT:[Whether pre-operative expenses falling within the categoriesspecified in section 115WB(2) would be covered in the scope offringe benefits?16. Any expenditure incurred for the purposes referred to in clauses(A) to (P) of sub-section (2) of section 115WB is liable to FBTirrespective of whether such expenditure is incurred prior tocommencement of the business or thereafter.]The flats will be the builder's stock-in-trade, and not capitalassets. So the FBT will be very much required to be paid on theseexpenses in the year in which they are incurred, no matter when theyare charged to the P & L A/c.Thanks,CA Sanjeev Bedi--- In

ICAI_CIRC_MEERUT_CA@yahoogroups.com, CAmanisha chopra wrote:>> Dear Members,>> This is a case of a Builder who is preparing his accounts onconstruction Completed method thus capitalising all the expenditureduring thconstruction period as pre operative.> The account of preoperatives shall be proportionally devided toall the flats.>> My query is that in case of capitalising these expenditure ,does it make any sence of exemptimng from FBT.>> I am slightly confused that's why this query.>>>>> CA MANISHA CHOPRA> NEW DELHI>