CA Mayank Tulsyan (B.Com(H), ACA) (274 Points)
14 August 2010cost of acquisition Rs 10000
Sale consideration Rs 20000
Advance money received From purchaser Rs 15000... purchaser could not give rest of the amount so his advance was forfeited.
now. cost of acquisition for seller would be NIL... As the forfeited amount will be deducted from cost of acquisition.
MY DOUBT here is that what will be the treatment of the excess of forfeited amount over cost of acquisition (10000-15000)
i.e Rs 5000.. is it taxable?
DINESH VASHISHT
(Manager)
(72 Points)
Replied 14 August 2010
DEAR mayank
if 15000 is more than the fare market value of assest then excess amount shall be taxable in the hands of assesee otherwise it's exempt from tax
Manoj BG
(Tax Professional and in Service)
(1795 Points)
Replied 15 August 2010
HI MAYANK,
IT WAS HELD IN SMITA N. SHAH VS. CIT (2005) THAT WHERE AFTER DEDUCTING ADVANCE RECEIVED FROM COST OF ACQUISITION, IF IT COMES TO MINUS, THEN THE COST OF ACQUISITION WOULD BE TAKEN AS NIL.
HOWEVER, EXCESS SHOULD BE TREATED AS INCOME FROM OTHER SOURCES AS THIS IS A RESIDUARY SECTION.
REGARDS,
MANOJ
CAclubindia
