Treatment of Advance Money received - (New) Section 81 / (Old) Section 51

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....e assessee in respect of such negotiations-- Scenario 1: Advance not taxed separately (a) shall be deducted from the cost for which the asset was acquired or the written down value or the fair market value, as the case may be, in computing the cost of acquisition; Example    Facts • Cost of land = Rs.50 lakh • Advance received from proposed buyer ....

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....xample   Facts • Same advance of Rs.5 lakh is already taxed as "Income from Other Sources". • Asset is subsequently sold. Application of Section 81(b) • Cost of acquisition remains Rs.50 lakh. • No reduction is made because the advance has already suffered tax. This avoids double taxation of the same amount Under Section ....

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.... negotiations do not result in the transfer of such capital asset shall be taxable in the hands of seller as Income From Other Sources (IFOS)." Notes: • Any advance or other money forfeited before 01-04-2014 shall be dealt with as per section 51, i.e. reduced from actual cost, WDV, etc. • Any advance or other money forfeited on or after 01-04-2014 shall be treated a....