Interest on advance returned back
This query is : Resolved
07 February 2015
3 years back I purchased a entered into a deal to purchase a land and paid the seller almost full amount as advance, registry & possession pending. Now the seller is not ready to sell the same to me. Instead he is ready to pay me my advance money back along with the interest. Now what will be the tax treatment of such interest in my hands & also on the hands of seller??
07 February 2015
You have to show the interest income in Income from Other Sources. If seller is a businessman or dealing in real estate sector he will claim the interest paid to you as deduction in his P&L Account
08 February 2015
I'm still not clear about taxability in my hands. Dept can tell that canceled deal is relinquishment of right & can demand capital gain on interest received??
08 February 2015
Cancelled deal cannot be treated as Relinquishment of Right because Relinquishment of right occurs on property which has been registered in name of person who is relinquished his right.
There is little bit problem relating to concept.
Interest Recd.
by you on Advance will be considered Income under Other Sources.
There is little bit problem relating to concept.
Interest Recd.
by you on Advance will be considered Income under Other Sources.
08 February 2015
Agreement to sell do not confer any right in property , its always against the specific person with which you had an agreement. So there's no relinquishment of any right
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