implication on Accounts & Income Tax

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

17 April 2010 Pls give me advice on folowing from incometax point of view for my Employer

My employer is in Construction line & selling plots to customers

In F.Y 2007-2008 he has sold 2 plots and reced entire consideration. He has booked tis amount as sale in FY 07-08

But not a single agreement was executed between seller & buyer

Now this plot holder wants our company to sell out this plot to any available customer for which our company is ready

Pls guide me on how this transaction can be booked in Books of Accounts & what is the implication from income tax point of view

pls advice

Mahesh Godse

CA CS CIMA Prakash Somani

CA CS CIMA Prakash Somani (Expert)
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17 April 2010 As it is clear that no formal agreement is signed so it can not be considered as sale. So the money already recd from customer should be dedcuted from the cost or added to sale value :)

shakuntala chhangani

shakuntala chhangani (Expert)
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17 April 2010 It should be considered as advance received from customer. As the full value of consideration has already been received and the co. also agreed to sell the same to some other party, the whole amount of consideration can not be cancelled. A small part can however be deducted from the amt. recd towards admn. exp. and the balance becomes refundable to the first mentioned party. this amount deducted can be used to reduce the cost at the time of subsequent sale. In accounts, it can be shown as an extraordinary receipt in p/l A/c.
Regards, CA Shakuntala Chhangani

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