Capital gain

This query is : Resolved

Divyansh (Querist)
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11 March 2014 A sold land to B for Rs. 1 cr. and he got 50 L from B after this B was not able to fullfill A's conditions so A forfeited everything, land as well as money both are with A, now A sold this land to C for Rs 1.25 Cr... on what amount A is liable to pay tax.. should he pay the tax on 50 L which he forfeited as well or just on 1.25 cr which is current sale amount.... lets take purchase price was jus Rs.1..

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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11 March 2014 Amount forfeited is REDUCED from the cost of acquisition.

Any excess of amount forfeited over cost of acquisition is a capital receipt which is NOT TAXABLE.

In this case, the cost of acquisition will become NIL and capital gain shall be computed accordingly.