VERY GOOD QUESTION

This query is : Resolved

CA.Sonia (Querist)
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26 November 2009 Mr.A had paid advance to a builder to book a flat of Rs.100000 and a year as he is was unable to pay the amount the builder gave back to him his advance.

1.What should be the treatment in A's Return if he is salaried employee?

2.Under what head it should be shown?

3.Should the builder pay the interest on Rs.100000?

4.If the builder pays less than Rs.100000 the loss can be claimed by mr.A?

M Prabhakar Menon

M Prabhakar Menon (Expert)
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27 November 2009 Return of an amount paid to book a flat is not an income. What did u do in the ITR when u paid the advance ? Surely you did not do anything except disclose it at the time of assessment. When A gets the flat or has taken a home loan only does the figures show up in the returns. Any interest received will have to be shown under income from other sources, TDS may be there on the interest payment so collect the Form 16A from the builder. If the builder pays less than the original amount there has to be sufficient reason a copy of the agreement of sale and the document given while repaying will disclose how to claim the loss, if any.You will have to show these documents to the ITO to back your claim.

shakuntala chhangani

shakuntala chhangani (Expert)
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27 November 2009 Ans 1 n 2. It will not be shown in return as it is not income.
Ans. If there any any such term in the agreement with the builder, then he may pay interest which will be shown as income from other sources. Here, since A is the defaulting party, I am not understanding why the builder will pay interest??
Ans. Loss can not be claimed under any section of IT by Mr. A.
Regards, CA Shakuntala Chhangani

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