How to consider excess payment received from builder / developer over and above actual payment to him for booking flat?? Whether it will be considered as income from other sources? How to account for this indirect income?
Payment was made to developer during the period from 2012-13 to 2014-15 towards booking of flat of Rs 19 lacs. However the project could not took off. And developer refunded this amount with interest totalling to 25 lacs. Then how to account for the excess of Rs. 6 lacs??
03 December 2015
It is not mentioned existence of agreement for construction of flat is entered into or not? In case the same was entered (whether / registered unregistered), is there is any clause in the agreement for payment of liquidated damages in case of delay in delivery of possession of the property or non-performance of the agreement.
If this payment is according to such clause in the agreement, it is not in the nature of revenue receipt but in the nature of capital receipt.
Please refer CIT V. Saurashtra Cement Ltd. (2010).
However, in your case the contract is not performed at all.
Nature of receipt may be analyzed correctly on scrutiny of the agreement only.
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