18 January 2014
hi experts please help me regarding this problem facing my Client. A and B Are two brother sells a land for a compensation RS 6500000. and there for they purchase a land in Rs 6200000 and registry of land made in the name of A and B Sons. and payment settled in cash basis.
in this transaction income tax department issue a query letter regarding this payment.
my question is "how to handle this situation and what will do i reply to query letter.
19 January 2014
what you mean by settled in cash??? if it has been done in cash, you anyways are a good case for scrutiny...
you need first have a look at the documents for purchase of land and see whether or not appropriate stamp duty has been paid or not and how the consideration has been reflected in the books of the buyer and seller.
19 January 2014
Sell At 6500000 Purchase in 6200000 and This Are real registry value shown in registry. and Selling Value Receive Via Account payee Check and My Client Made Cash Payment for Purchase Of Land
19 January 2014
well as long as you have the registered sale deed for purchase, you should be able to defend as far as the cost...however, the problem is that you have paid in cash..so you need to prove the source of this cash to ensure that you dont hit by section 69.
Also, it doesnt matter where the asset was parked, in assets or purchase...either it would be taxed as capital gains or business income.
20 January 2014
You Can defend that proceeds of sales has been gifted to sons of seller and the sons have purchased the new land. However you would be not able to claim benefit of section 54 if any.
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