Rohit Sharma (Audit Manager) (51 Points)
02 June 2015Hello Experts,
Please provide your comments on following query:
I had given some advance money for purchase of land to a party but he failed to deliver the land and after 5 years he is giving me my advance money with increased value. I need to know the tax treatment in my hand if there would be any?
Thanks
Rohit
DEEPU HN
(Associates)
(360 Points)
Replied 02 June 2015
Advance money will not taxable and if u received excess of advance money taxable under other income.
Rohit Sharma
(Audit Manager)
(51 Points)
Replied 02 June 2015
Bishwajit Mitra
(Propritor)
(22 Points)
Replied 02 June 2015
harshit darji
(accountant)
(446 Points)
Replied 02 June 2015
Pankaj Kumar Pareek
(Article Assistant)
(23 Points)
Replied 02 June 2015
Z
( )
(2960 Points)
Replied 02 June 2015
If he failed to deliver the property because of fault on his behalf then why did he forefietted the advance ? Further you could have sued him for non performance of the specific contract
One view can be taken that the excess money which you are now receiving is for surrendering your right to acquire that land and hence there is a transfer and such excess shall be liable to be taxed under the head capital gain.
Advance money forefieted is income for the receiver from 1.04.14 [S.56(2)(ix)]
Anju Agiwal
(Student CA Final )
(25 Points)
Replied 02 June 2015
LALIT KUMAR
(CA FINAL STUDENT)
(21 Points)
Replied 03 June 2015
Excess amount received will be taxable as capital gains. Refer K.R.srinath case.
Rohit Sharma
(Audit Manager)
(51 Points)
Replied 03 June 2015
Thanks All, I got the answer and reference is here below:
It will be treated as capital asset as the definition of transfer in relation to capital asset includes
(i) the sale, exchange or relinquishment of the asset; or
(ii) the extinguishment of any rights therein
Treatment in the hands of buyer
CAclubindia
