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Query about head of income

M K U VARMA (PROPRIETOR & CEO) (38 Points)

02 December 2013

Property that was purchased an year back. Collected Rs.10 lakh More while cancelling “REGISTERED ABSOLUTE SALE DEED” in case of a business man can this amt of Rs.10. lakh can this Rs.10 lakh be treated as Business Income now? If not under which Head is it taxable?.

Regards

MKU Varma

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11 Replies

CA Mitesh N Kothari (9821662799) (391 Points)
Replied 02 December 2013

what is your business?

Mihir (Wealth Manager) (5293 Points)
Replied 03 December 2013

Income from other sources.

CA Mitesh N Kothari (9821662799) (391 Points)
Replied 03 December 2013

If it is cancellation charges than it is a form of capital receipt. No income tax during the year. But in future when u sell it u have to deduct this amount from your cost of acquisition and then calculate indexed cost of acquisition. If it is related to your business then it will be taxable in current year.

M K U VARMA (PROPRIETOR & CEO) (38 Points)
Replied 05 December 2013

Dear Mr. Kothari,

I purchased the property originally. That was cancelled when I received more. You are talking as if I am the property owner. Kindly look into the query and suggestme whether I can take it as business income. My business is real estate/property dealer.

CA Mitesh N Kothari (9821662799) (391 Points)
Replied 05 December 2013

That was cancelled when I received more. What do u mean bt this?

(Guest)

Do you mean that u got a profit of Rs 10L (eg 60L recd-50L cost)?

In that case it will be your capital gain

CA Mitesh N Kothari (9821662799) (391 Points)
Replied 07 December 2013

Hi Madhavi,

It cant be capital gain because it is related to his business.

M K U VARMA (PROPRIETOR & CEO) (38 Points)
Replied 07 December 2013

Yes, Ms. Madhavi. That's what exactly I am trying to say. I got a profit of Rs.10-00L. And mind U I am the buyer. How can I get CAPITAL GAINS, without a capital asset in my name?

I hope I can treat it as my business Income. But the crux of the issue is if this is only income I have in the full year, all my expenses spanned over the full year be allowed against this income? Is there any situation for the IT Dept. not to allow my full year expenses? Can any one examine and give valued inputs? I shall thank one and all for all the deliberations.

CA Mitesh N Kothari (9821662799) (391 Points)
Replied 09 December 2013

Mr Varma please explain in detail how the transaction took place.

CA Vanamala Phani Kumar (Proprietor of M/s Vanamala and Co) (972 Points)
Replied 09 December 2013

Generally ,it is taxable under head Income from other sources.

Even it is for personal use or business use

M K U VARMA (PROPRIETOR & CEO) (38 Points)
Replied 09 December 2013

Dear Mr. Mitesh Kothari,

It is a strange transaction, I know. That is why I giving U again the details. I purchased property "X" in FY2011-12 say for 50L. During FY 2012-13 that document was CANCELLED and I collected 60L thereby earning 10L.

The mute point I want to know is even if it is not considered as my business income all my year's business expenditure shall result in a LOSS. Can this loss be allowed for inter-head adjustment under the same year so that my tax out-go is not unduly hogh. Consider I have NOT filed my returns for AY 2013-14.

Thank U all