Income tax query -forfeiture

No.... it is a capital loss for the buyer x. he cannot claim this in P & L A/c.

 is there any specific section for denial or any case law plz tell

being a PCC student.... i havent read much case laws on income tax. but i have given u answer as i have also raised this question to my tuter and my CA, who answered the same as above.

ITS A CAPITAL loss. will not be allowed as deduction. travancore case applies to the the transferor, where the amt forfieted exceeds the amt of cost of quisition.

 travancore case does not apply to the party whose money is forfeited

 but that contract was in the course of biz ..

why should it not be considered as capital gain loss ?

is`nt  hardship for X

as the great people of India has said, "there is no space for "why" in Indian income tax act. :)

 capital expenditure for specified tangible assets and intangible assets are allowed under sec 32.

other capital expenditur like r/d , family promotion etc. is allowed u/s 35 36. these are all specific provisions which provide for allowance for capital expenditure.

no other capital expenditure is allowed as deduction.

also the amt forfieted cant be treated as bad debts....because no income was booked while creation of debt.

clearly even its hardship for x, such amt cant be allowable because its of capital nature

ok thanks both of u

 (sec 51)

where any capital asset , was on any previous occasion , the subject of negotiations for its transfer, any advance or other money received by the assessee in respect of such negotiation, shall be deducted from the cost for which the asset was acquired or W.D.V or fair market value as the case may be.

thus the advance paid by X 10 LACS will be deducted from d W.D.V or F.M when d seller again make agreement to  sell d property in future. 

 i am asking that wht will be the treatment in the hands of X

No treatment in hands of X, it is a dead loss for X.