Treatment of advance money forfeited
This query is : Resolved
Neeraj Joshi
(Querist)
07 February 2013
If a person sales its property (House Property) and received advance for it but the purchaser couldn't pay the rest money. What is the treatment of the advance money forfeited under Income Tax Act in the hands of seller? and
What will be the treatment of advance money forfeited if the forfeited amount is greater than the cost of acquisition of the property?
What will be the treatment of advance money forfeited if the forfeited amount is greater than the cost of acquisition of the property?
CA VISHNU GAVKARE
(Expert)
08 February 2013
It will be deducted from cost of acquisition.
If its more than cost then the excess will be taxable.
If its more than cost then the excess will be taxable.
Message likes :
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15 July 2013
As per Section 51 of the Income Tax Act, 1961 any advance money received and forfeited by the assessee should be reduced from the cost of acquisition. If the amount of the advance is more than the cost of acquisition, the cost of acquisition is NILL.
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