Friends, I need an advise for a following case:
A partnership concern wishes to increase its capital as on 31-03-2013. For this one of the partner has consented to introduce capital in cash. This amount the partner has received after forfeiting advance received against sale of Land. The advance was also received in cash on various dates in the Last Previous Year. The Agreement to Sale made with forfeited party clearly had a clause that in case of non-payment of balance amount within 30days, the advance would be forfeited.
My query is that
1. Will this forfeiture result in Capital Gain or any kind of Tax?
2. Can this advance be introduced as partner's capital being in cash?
3. As an auditor, what precautions we should take if case is subjected to Scrutiny?
Hope you would reply soon. Thanks
CAclubindia
