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This query is : Resolved

priya (Querist)
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09 August 2012 an assessee has brought share of private limited company face value rs 10 @900 rs about 3 yrs back. the assessee was going to sell the shares to another person and took advance from the other person , however now the sale has not took place. and the assessee is forfeiting the amount.
IS TAX LIABLE ON IT . OR WHAT WILL BE THE TREATMENT OF SUCH MONEY RECEIVED

CA. B.SRINIVASULU

CA. B.SRINIVASULU (Expert)
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09 August 2012 From the income tax point of view check the percentage of advance received vs the proposed sale value. If it is in between less than 10 to 25% then you can take it to income of current year stating under miscellaneous income due to cancellation of contract. If the amount is in between 25% to 50% then you can reduce from your original cost and show the balance as investment in current year. If the advance is more than 50% then assessee is postponting the liability towards capital gain tax if any may arise and you have to recheck the documents througly.

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