cost of acquisition Rs 10000
Sale consideration Rs 20000
Advance money received From purchaser Rs 15000... purchaser could not give rest of the amount so his advance was forfeited.
now. cost of acquisition for seller would be NIL... As the forfeited amount will be deducted from cost of acquisition.
MY DOUBT here is that what will be the treatment of the excess of forfeited amount over cost of acquisition (10000-15000)
i.e Rs 5000.. is it taxable?
DEAR mayank
if 15000 is more than the fare market value of assest then excess amount shall be taxable in the hands of assesee otherwise it's exempt from tax
HI MAYANK,
IT WAS HELD IN SMITA N. SHAH VS. CIT (2005) THAT WHERE AFTER DEDUCTING ADVANCE RECEIVED FROM COST OF ACQUISITION, IF IT COMES TO MINUS, THEN THE COST OF ACQUISITION WOULD BE TAKEN AS NIL.
HOWEVER, EXCESS SHOULD BE TREATED AS INCOME FROM OTHER SOURCES AS THIS IS A RESIDUARY SECTION.
REGARDS,
MANOJ
thank you
Naveen Fintech Pvt Ltd
Kolkata
CA Inter
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Gupta Sachdeva & Co. Chartered Accountants
New Delhi
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