Sourav Garg (CA Final Student.) (101 Points)
06 November 2014
SHINY
(CA Final Student)
(699 Points)
Replied 07 November 2014
Hi Sourav
It ll not be deducted as per Sec 51 and is Capital Receipt in hands of Previous Owner - as per ICAI view.
Swami Ayyappa Nuli
(TAX ADVISOR & CONSULTANT AT G.S.T SUVIDHA CENTER)
(1372 Points)
Replied 07 November 2014
Where clubbing provisions apply, you need to deduct Advance money forfeited by previous owner from Cost of acquisition. If the clubbing provisions donot apply like if you got a gift from your friend on the occassion of marriage it will be exempt in the hands of you and when subsequently you transfered it then capital gain will be taxable in your hands. In such cases you can not deduct cost of acquisition from Net sale, hence no question of Advance money forfeited. From A.Y 2015-16, such forfeited amount will be taxable in the hands of previous owner as Income from other sources in the year of forfeiture.
Rupesh Soni
(Taxation Consultant & CA final student)
(493 Points)
Replied 07 November 2014
forfieted Money shall not deducted from cost of acuisiton if its forfited by previos owner ...but if you (seller ) forfited it then it must be dudcted from cost then indexation applied on it less it from SALE CONSIDERATION to get LTCG
Sourav Garg
(CA Final Student.)
(101 Points)
Replied 07 November 2014
Gagan Deep Singh
(CHARTERED ACCOUNTANT)
(1190 Points)
Replied 26 November 2014
From AY 2015-16 all money forefieted will be taxable as income from other sources u/s 56(2)(ix) in the year in which money forefieted.. It will not be deducted from COA. Its an outdated provision now.
Since previous owner had forefieted the money, therefore as per present provision tax implications will be in the hands of previous owner in the year in which he forefieted.
Landmark Judgments: Important Provisions of the EPF & ESI Act interpreted by the Honorable Supreme Court of India
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