Taxability on forfeited amount

[Anup Kumar Grover]

An Assessee has received an advance against property, on non payment of balance consideration, the advance is forfeited, whether this forfeited amount is subject to Income Tax in the year, in which it is received/forfeited

[Surender Gupta]

It depends on the nature of property. If the property is in the nature of capital asset and liable to be taxed as Capital Gains, the amount so forfeited shall be deducted from the cost of purchase of such assets and shall be taxed in the year of actual sale.

AI Summary

Taxability of forfeited advance: treatment depends on property nature; as capital asset, deducted from cost and taxed on sale.
Taxability of a forfeited advance depends on the nature of the property: if the property is a capital asset, the forfeited amount is deducted from the cost of acquisition and the tax consequence arises in the year of actual sale when capital gains are computed.