friends i have a problem pls help...
mr. A purchased a house on 1-4-09 for rs 1,00,000 on 11-11-09 he forfeited 10,000 from B... on 1-1-2010 he gifted this house to his son C .. on 1-2-2010 C forfeited 10,000 from D... on 1-3-2010 he sold to E for rs 2,00,000...
what is the tax implication for A and C...
As there is no sale in respect of A, Hence in hand of A nothing will be taxable. For C, Cost of aquisition of house will be same as for previous owner, i.e. Rs. 1,00,000/- As per section 51, If any advance money is forfeited by assessee himself then that money upto extent of cost will be deducted from cost. Balance amount if any will be treated as COA. and then Capital gain will be computed.
In respect of C, Capital Gain :-
Sales Consideration Rs. 2,00,000
less : COA Rs. 90,000 [1,00,000-10,000(forfeited by C)]
-------------------------
Capital Gain Rs. 1,10,000
dear sailesh ,
can u clarify my doubt..
whether amount forfeited by mr A will not be reduced from cost of Acqusition...
Yes. Amt. forfeited by Mr. A will not be reduced from COA. Because Section 51, Says only that amount of advance forfeited will reduce from COA which assessee (Mr. C) himself forfeited.
amount of consideration should reduced by the forfeited by the seller of the capital assets. amount forfeited by previous owner should not be reduced from the sale consideration
leave tension read it very carefully
best of luck for u r exems
CAclubindia
