Taxability of advance for transfer of a capital asset

Sec 51 earlier provides that any advance received or retained and forfeited in future shall be reduced from the cost of acquisition. Now that advance is no more necessary to reduce from cost and it has to be shown as the income under other sources us 56 in the previous year. As per the language of the law these amendments will take effect from 1st April 2015 and will apply accordingly in relation to A.Y. 2015-16. Facts of the Case Since the assessee entered into the memorandum of understanding on 20th march 2014, total sales consideration was Rs. 1,90,00,000 Advance received Rs. 35,00,000 on 130314 and 40,00,000 on 050514 and balance consideration to be received before 301114 otherwise the advance will be forfeited. So in case of forfeiture, how much advance need to be reversed in order to avoid tax. Please give your valuable suggestions.

Replies (1)

For 30/11/2014, still time is there. If he will pay there will be no problem.

If he dint pay the balance amount before 30/11/2014,75akhs will become taxable.

I am not sure.

If you don't pay tax, AO will surely raise question on You.

Because it is one of the way to change black money into white money.

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