Treatment in books on sale of flat on behalf of investor

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

14 October 2014 The case is of a builder.
the builder had received Rs. 14.85 lakhs as advance money from an investor. Allotment is yet to be made. However, as per the directions of investor, builder sold the flat which was to be given to investor to a third party and made a contract in his own name. Now the builder is paying Rs. 41 lakhs to investor which is a full value of consideration of flat sold.

So please tell what will be the consequences in builder's books as he is receiving & paying full amount to investor though contract is incurred by him?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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14 October 2014 Though contract is entered in his own name it is on behalf of the investor hence no entries can be made for this transaction in his books except receipt and payment in the name of the investor.

Querist : Anonymous

Querist : Anonymous (Querist)

22 January 2015 We receive the amount from the new investor and we pay the amount to the previous investor. So, now i have to pass the entry for the excess amount received over and above agreed value to the old investor. So, there will be more outflow of resources for me.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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22 January 2015 Keep the amount under liability pay from it to the old investor. Any excess amount received to your account take it as other income in your account.

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