A real estate company took advance money from its customers in the course of business on which no interest is supposed to be paid to the customers. At the end of financial year, company is in dilemma whether to treat thi

As per the Rule 2(xii) of the Companies (Acceptance of Deposits) Rules, 2014, deposit does not include any amount received in the course of, or for the purposes of the business of the company as an advance for supply of goods or provision of services/ received in connection with consideration for an immovable property/ as security deposit for performance of contract for supply of goods or services/as advance received under long term projects for supply of capital goods. But if the amount received becomes refundable (with or without interest) due to the reasons that the company accepting the money does not have necessary permission to deal in the goods or properties or services for which money is taken, then the amount received shall be deemed to be deposit. Further, whether interest is charged or not is immaterial. Thus, advance taken from customers by Real Estate Company shall not be considered as deposits. But if it is not adjusted against the property in accordance with the terms of agreement or arrangement, then it will be treated as deposit.