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Refundable security added in income.

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Aman Sachdeva

12 Points Posted on 06 March 2023

Mr. A had paid Rs 400000 to Mr. B which comprises of Rs 2 lakh as payment towards supervision charges and Rs 2 lakh as refundable security. However, refundable security was long outstanding in the books of Mr. B and now has been added in the income of Mr. B. However, which has been paid during the course of proceedings and copy of challan and bank statement of both the parties has been attached.
Any case that will enhance the content of the reply to the department.

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Quick Summary

This discussion addresses a situation where a refundable security deposit was incorrectly added to Mr. B's income. To resolve this with the tax department, it's crucial to provide the original contract clearly stating the amount as a security deposit, along with a receipt of even date. Submitting bank statements and challans for both parties will further support your claim that the funds were indeed a security deposit and not income.