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Forfeit of advance agts sale of property

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(Querist)
02 January 2009 Dear all, I need your help. Case is that we had to sale our property for 50 Lac and we had received Rs. 5 Lac as an advance. Now the party has cancelled the deal and accordingly we have forfeited the advance amount of Rs. 5 Lac. My entity is properietorship. I am taking depreciation on this property.
My query is that whether Rs. 5 Lac is my Other sources Income or its capital receipt and will adjust whenever I will sale this property.
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Bhaskaran Chackrapani Warrier

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Bhaskaran Chackrapani Warrier (Expert)
02 January 2009 Reduce the amount forfeited from the cost of the property.
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CA Chaitanya

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CA Chaitanya (Expert)
02 January 2009 Amount received and forfeited by the assessee will be reduced from the cost of acquisition from the asseesee when the property is sold.
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CA Chaitanya

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CA Chaitanya (Expert)
02 January 2009 If the assessee did not sell the property in his life time , then that amount is neither taxable in his hands nor taxable in the hands of his legal heir.
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