Implications on Sale of Immovable Asset bought from FCRA fund

Posted on July 9, 2021 by SRRF

Dear Members

Greetings from the IRDWSI!

Query regarding Sale of land and buildings bought from FCRA funds.

We would like to have any information regarding sale of assets bought from FC Funds before 2020 Amendment and to be sold after the amendment of FCRA 2020

Please guide us what are implications from FCRA and IT in the changed and amended act. Looking for your advise in this regard,

Thanks and regards,

Stanley

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3 Responses to Implications on Sale of Immovable Asset bought from FCRA fund

  1. Dhruv Mankad says:
    July 14, 2021 at 4:19 am

    Dear Subhashji,

    Thanks for this response. My question is: if we have an MoU fro redevelopment with a Builder for the asset purchased exclusively from foreign fund from an FCRA account, and the Builder pays us for rent for a transit premise and transportation for shifting, how should this be reflected in the books of account? Though, the other funds like rent, transportation is not from a foreign source but toward redevelopment of an asset purchased from foreign fund account and later its value will remain in FCRA balance sheet with no additional development cost?

    Dhruv Mankad

    • Subhash Mittal says:
      July 21, 2021 at 7:37 am

      I think what you are saying part of the asset will remain in FCRA Books and another part will be in non-FCRA books.

  2. Subhash Mittal says:
    July 13, 2021 at 1:00 pm

    There is no change in law relating to assets. Your FCRA assets are in the FCRA books of accounts. Hence whenever you sell this asset, proceeds therefrom should remain in the same books of accounts (Balance Sheet) except instead of Immovable Property, it may now be in the Form of liquid assets, i.e. funds rec’d should be deposited in FCRA A/c. Problem that you may face is that SBI may not accept credit of funds from a local source into FCRA Bank A/c. You will need to convince them, show FCRA FAQs, provisions etc. to indicate that these funds have been generated from FCRA assets.

    The above is the straight answer based on current practices. In my view law is not very clear on this aspect, but that is something, I feel it would not be appropriate to discuss on a public platform, as it will cause more confusion.

    As far as Income Tax is concerned, there is no change and same provisions of 85% application and accumulation over 5 years will be applicable.

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