Forfeiture of earnest money

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CA Vandana Goyal

CA Vandana Goyal (Querist)
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22 November 2012 Is earnest money forfeited loss under the head capital gain for buyer on default of buyer

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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22 November 2012 Where the advance given by the prospective buyer has been forfeited by the seller then such amount is a capital loss for the buyer which has no treatment (a dead loss).

This is because he did NOT acquire any capital asset by giving advance. On forfeiture it CANNOT be said that the assessee has transferred any capital asset.

Also it cannot be said that he has acquired any capital asset against such amount.

Accordingly such amount will NOT have any treatment.

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CA Vandana Goyal

CA Vandana Goyal (Querist)
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23 November 2012 Is there any recent case law or notification for it apart from CIT vs Sterling Investment Corporation Ltd (1980) 123 ITR 441.

CA Rashmi Gandhi

CA Rashmi Gandhi (Expert)
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01 June 2017 TDS Payable A/c

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Forfeiture of earnest money

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