Advance money against agreement to sell

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

29 September 2010 We have been told that there is some recent judgement of High court by virtue of advance forfeited that it is not a capital receipt i.e it is not adjusted against cost of acquisition . kindly clarify

Aditya Maheshwari

Aditya Maheshwari (Expert)
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29 September 2010 No there is no such judgement.

Section 51 is very clear on it.
Advance money received.

51. Where any capital asset was on any previous occasion the subject of negotiations for its transfer, any advance or other money80 received and retained by the assessee in respect of such negotiations shall be deducted from the cost for which the asset was acquired or the written down value or the fair market value, as the case may be, in computing the cost of acquisition.