Sale of flats on token money basis

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kunal (Querist)
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10 January 2013 sir .. if mr A gives rs 10lakhs as token money to builder to purchase the flat for rs 1 crore and mrA paid service tax on rs 10lakh as flat is under construction

in the mean while mrA agrees to sale this flat to MR.C after obtaining completion certificate for rs 1.2 crore

AND SALE DEED IS EXECUTED DIRECTLY IN FAVOUR OF MR.C

DOES THAT PROFIT OF RS 20laks liable to service tax in the hands of MR.A ??

if yes,CAN HE CLAIM INPUT CREDIT OF SERVICE TAX PAID ON RS 10 LAKH???

SIR PLEASE REPLY

Guest

Guest (Expert)

10 January 2013 The transaction between Mr A & Mr. C is that of sale transaction on which service tax is not applicable.

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kunal

kunal (Querist)
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10 January 2013 sir how can it be a sale transaction ??
mrA just paid advance money (token money) and
sale deed is executed directly between builder and mr.c

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kunal

kunal (Querist)
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10 January 2013 and sir what if mr.A business is to book falt on token money( and sell them to prospective buyer..

does profit on such transction amounts to brokerage or commission ?
if not then what is the treatment of that profit

Guest

Guest (Expert)

10 January 2013 In case Mr. A is in business of real estate i.e. business of buying & selling properties, the amount earned by Mr. A shall be profit from business not commission. Because commission or brokerage is paid by builders to the brokers or real estate agents. Moreever Mr. A has invested his money i.e. paid token amount it will be a transaction of purchase & sale of property on which service tax is not leviable since it does not amount to service.

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