09 August 2012
an assessee has brought share of private limited company face value rs 10 @900 rs about 3 yrs back. the assessee was going to sell the shares to another person and took advance from the other person , however now the sale has not took place. and the assessee is forfeiting the amount. IS TAX LIABLE ON IT . OR WHAT WILL BE THE TREATMENT OF SUCH MONEY RECEIVED
09 August 2012
From the income tax point of view check the percentage of advance received vs the proposed sale value. If it is in between less than 10 to 25% then you can take it to income of current year stating under miscellaneous income due to cancellation of contract. If the amount is in between 25% to 50% then you can reduce from your original cost and show the balance as investment in current year. If the advance is more than 50% then assessee is postponting the liability towards capital gain tax if any may arise and you have to recheck the documents througly.
CAclubindia
