Capital gain
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
24 June 2016
During F. y. 2014-15 I have book a flat and paid first two installment i.e. 715000 but in the F.Y. 2015-16 i have surrendered my flat to builder. At the time of surrender builder had deducted 350000/- as penalty and refund balance amount.
I have sold one of my flat in the F.y. 2015-16. from which i have long term capital gain.
My question is , can i adjust surrender value from my long term capital gain while computing taxable income.
Please suggest
I have sold one of my flat in the F.y. 2015-16. from which i have long term capital gain.
My question is , can i adjust surrender value from my long term capital gain while computing taxable income.
Please suggest
Vipin Garg
(Expert)
24 June 2016
Respected Sir/Ma'am,
In my opinion the tax treatment of the same would as under: -
Forfeiture of earnest money by the vendor if due to default on the part of vendee, will not amount to relinquishment of a right in that asset. Therefore the amount forfeited will not be allowed as a capital loss under the head capital gains as uprooted in CIT vs. Sterling Investment Corporation Ltd (1980) 123 ITR 441.
However, if the seller fails to honor the deal and pays the buyer double the compensation, this will be treated as capital gain because it amounts to relinquishment of a right by the buyer.
I hope your doubt is clear now.
In my opinion the tax treatment of the same would as under: -
Forfeiture of earnest money by the vendor if due to default on the part of vendee, will not amount to relinquishment of a right in that asset. Therefore the amount forfeited will not be allowed as a capital loss under the head capital gains as uprooted in CIT vs. Sterling Investment Corporation Ltd (1980) 123 ITR 441.
However, if the seller fails to honor the deal and pays the buyer double the compensation, this will be treated as capital gain because it amounts to relinquishment of a right by the buyer.
I hope your doubt is clear now.
Message likes :
2 times
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Late Filing Fee Waiver for Q1 Form 144 (Earlier 27Q) – Transition to Income-tax Act, 2025
- Ito add credit side of bank
- GSTR9 Annual Return
- Employee secondment
- Gift to nri relatives resides in usa
- Form 144 TDS Return Validation error
- Applicability of tax on invoice
- Form 144 TDS Return Validation Error – Mandatory Fields
- Rent agreement of House of deceased person
- GST ITC as per notification 12/2023- central tax
- Capital gain on commercial property and investment in residential property
- Import of Capital Machine
- FAST DS 26 Undisclosed Foreign Asset Disclosure Scheme 2026
- Regime change
- Tally: Imported bank entries do not show up in manual reconciliation
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
- FAST-DS 2026 Under Tax Law - No recourse or support for person declaring via this scheme?
- Guidance Needed: Linking Multiple Form 26QB Payments and Responding to ITD Defaulter Notice
- How to pay remaining amount of TDS after due date?
- Resigning a auditor from the company for misconduct
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
